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Homebuilder confidence weakens as cost concerns mount

Builder sentiment slides two points to 64 in June

As cost and labor concerns continue to grow, new data indicates homebuilder confidence retreated two points to 64 in June, according to the National Association of Home Builders/Wells Fargo Housing Market Index.

“While demand for single-family homes remains sound, builders continue to report rising development and construction costs, with some additional concerns over trade issues,” NAHB Chairman Greg Ugalde said. 

In June, the index measuring current sales conditions fell from 72 to 71 points, while buyer traffic slid from 49 to 48. Additionally, expectations over the next six months dropped from 72 to 70 points. 

The three-month moving averages for regional HMI scores show the Northeast climbed three points from 57 to 60 points, the South also moved backward from 68 to 67, the West held its ground at 71 points and the Midwest gained three points from 54 to 57 points.

“Despite lower mortgage rates, home prices remain somewhat high relative to incomes, which is particularly challenging for entry-level buyers,” NAHB Chief Economist Robert Dietz said.  “And while new home sales picked up in March and April, builders continue to grapple with excessive regulations, a shortage of lots and lack of skilled labor that are hurting affordability and depressing supply.”

NOTE: The NAHB/Wells Fargo Housing Market Index gauges builder opinions of single-family home sales and expectations, asking for a rating of good, fair or poor. Builders are also asked to rate prospective buyer traffic from very low to very high. The scores are used to calculate a seasonally adjusted index with a rating of 50 or over indicating positive sentiment.

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