A contractor moves roofing material to a house under construction in the Toll Brothers Quarry urbanization at Gale Ranch in San Ramon, California.
David Paul Morris | Bloomberg | Getty Images
Just two months ago, home builders had never been happier. Buyer demand, driven by the pandemic-induced desire for larger homes in suburban neighborhoods, had builders ’sentiment at an all-time high. Now the rising cost of building houses makes builders less optimistic.
Builder confidence in the single-family home market fell 3 points in January to 83, according to the NAHB / Wells Fargo housing market index. Anything above 50 is considered positive. Two months ago, the index reached a record high of 90. In January 2019, before the pandemic hit, it was at 75.
“Builders face supply constraints related to costs of wood and other materials, lack of affordable batches and labor shortages that delay delivery times and push upward house prices, ”said NAHB President Chuck Fowke, a Tampa, Florida home builder.
Of the three components of the index, current sales conditions fell 2 points to 90. Sales expectations in the next six months fell 2 points to 83 and buyer traffic fell 5 points to 68.
“While housing continues to help boost the economy, limited inventory limits more robust growth,” said Robert Dietz, chief economist at the NAHB. “The scarcity of building plots makes it difficult to meet strong demand and rising material prices far outweigh house price increases, which in turn is hurting the affordability of housing.”
With a three-month moving average for HMI regional scores, sentiment in the Northeast fell 6 points, to 76. It rose 2 points, to 83, in the Midwest. In the south, sentiment fell 1 point to 86 and in the west it dropped one point to 95.