Despite strong buyer demand, builder sentiment continued to slip in February as the industry grapples with ongoing building material production bottlenecks that are raising construction costs and delaying projects.
Builder confidence in the market for newly built single-family homes moved one point lower to 82 in February, marking the second straight month that confidence levels have declined by a single point, according to the National Association of Home Builders/Wells Fargo Housing Market Index. Despite these monthly declines, the HMI has posted very solid readings at or above the 80-point mark for the past five months.
"Production disruptions are so severe that many builders are waiting months to receive cabinets, garage doors, countertops and appliances," says Jerry Konter, NAHB chairman. "These delivery delays are raising construction costs and pricing prospective buyers out of the market. Policymakers must make it a priority to address supply chain issues that are harming housing affordability."
"Residential construction costs are up 21 percent on a year-over-year basis, and these higher development costs have hit first-time buyers particularly hard," says Robert Dietz, NAHB chief economist. "Higher interest rates in 2022 will further reduce housing affordability even as demand remains solid due to a lack of resale inventory."
The HMI index gauging current sales conditions increased one point, the gauge measuring sales expectations in the next six months fell two points, and the component charting traffic of prospective buyers posted a four-point decline.
