Concerns about market affordability contributed to homebuilder confidence falling one point to 67 in August according to the National Association of Home Builders/Wells Fargo Housing Market Index.
“The good news is that builders continue to report strong demand for new housing, fueled by steady job and income growth along with rising household formations,” NAHB Chairman Randy Noel said. “However, they are increasingly focused on growing affordability concerns, stemming from rising construction costs, shortages of skilled labor and a dearth of buildable lots.”
NAHB Chief Economist Robert Dietz said builders are monitoring how tariffs and the impending trade war are affecting key building material prices, including lumber.
“These cost increases, coupled with rising interest rates, are putting upward pressure on home prices and contributing to growing affordability challenges, as indicated by the latest quarterly reading of the NAHB/Wells Fargo Housing Opportunity Index,” Dietz said.
In August, all three HMI indexes inched down. Current sales conditions fell slightly from 74 to 73 points, while buyer traffic dropped two points from 52 to 49. Lastly, expectations over the next six months dropped from 73 to 72 points.
The three-month moving averages for regional HMI scores show the Northeast fell three points from 57 to 54 points, and the South and the West remained unchanged at 70 and 75 points, respectively. The Midwest also declined three points from 65 to 62 points, respectively.