Builder confidence in the market for newly-built single-family homes fell again in July to its lowest level since last November.
The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) is down two points from the June level, which was revised downward by one point.
“Our members are telling us they are growing increasingly concerned over rising material prices -- particularly lumber,” said NAHB Chairman Granger MacDonald. “This is hurting housing affordability even as consumer interest in the new-home market remains strong.”
Taking a closer look
The NAHB/Wells Fargo HMI, which is derived from a monthly survey, gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.”
In addition, the survey asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
All three HMI components were down in July but remain in solid territory. The components gauging current sales conditions dipped two points to 70, while the index charting sales expectations in the next six months was off two points to 73. The component measuring buyer traffic slipped one point to 48.
“The HMI measure of current sales conditions has been at 70 or higher for eight straight months,” said NAHB Chief Economist Robert Dietz, “indicating strong demand for new homes.”
But, he adds, “builders will need to manage some increasing supply-side costs to keep home prices competitive.”
Checking HMI scores regionally, the Northeast was up a point to 47. The West and Midwest each edged one point lower -- to 75 and 66, respectively, and the South was down three points to 67.