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Confidence in newly built single-family homes drops to lowest level since August 2020

Homebuilder confidence for newly built single-family homes dropped one point to 80 in July, per the National Association of Home Builders and Wells Fargo Housing Market Index released today.

It’s the lowest level since August 2020.

High building material prices and supply shortages continue to hamstring homebuilders — in particular, the price of the popular oriented strand board, which has increased more than 500% above its January 2020 level, according to Chuck Fowke, NAHB chairman.

But Washington, D.C. is now firmly in the loop, Fowke said.

On July 16, members of the Biden Administration met with homebuilder representatives — including builders, housing advocates, lumber companies, real estate firms, loggers and labor unions, per a White House statement — to discuss supply bottlenecks, a lack of skilled workers, and the ever-rising cost of new builds.

Present at the meeting were Secretary of Housing and Urban Development Marcia Fudge, National Economic Council Director Brian Deese and Council of Economic Advisers Chairwoman Cecilia Rouse.

“We are grateful that the White House heeded our urgent plea to hold a building materials meeting with interested stakeholders on July 16 to seek solutions to end production bottlenecks that have harmed housing affordability,” Fowke said in a statement Monday.

The three major HMI indices were mixed in June, as the index gauging current sales conditions and traffic of prospective buyers fell one and six points, respectively, while the gauge charting sales expectations in the next six months increased two-points to 81.

Looking at the three-month moving averages for regional HMI scores, the Northeast fell four points to 75, the Midwest decreased one point to 71, and the West fell two points to 87. The South remained at 85.

“Homebuilders are contending with shortages of building materials, buildable lots and skilled labor as well as a challenging regulatory environment,” said Robert Dietz, NAHB chief economist. “This is putting upward pressure on home prices and sidelining many prospective home buyers even as demand remains strong in a low-inventory environment.”

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