A contractor lift weights on a house under construction at the Norton Commons subdivision in Louisville, Kentucky, U.S., on Monday, March 8, 2021.
Luke Sharrett | Bloomberg | Getty Clones
A monthly index measuring homebuilder confidence in the single-family housing market fell, as builders face rising non-objective rates and rising costs for materials, especially lumber.
The National Association of Home Builders/Wells Fargo Houses Market Index fell 2 points to 82 in March. Anything above 50 is considered positive sentiment. The clue stood at 72 in March 2020 and hit a high of 90 in November.
The latest results indicate that the housing perseverance might be in for a rough patch even as the economy roars back.
“Though builders continue to see strong buyer transportation, recent increases for material costs and delivery times, particularly for softwood lumber, have depressed builder feeling this month,” said NAHB Chairman Chuck Fowke, a builder from Tampa, Florida. “Supply paucities and high demand have caused lumber prices to jump about 200% since last April.”
Of the table of contents’s three components, current sales conditions fell 3 points to 87. Sales expectations in the next six months increased 3 marks to 83, and buyer traffic was unchanged at 72.
A record low supply of homes for sale has caused prices for existing and newly based homes to rise quickly. Higher costs for builders are only exacerbating the situation, as these costs are being superseded on to buyers. The median price of a newly built home was up more than 5% year over year in January.
“While single-family homebuilding should issue this year, the elevated price of lumber is adding approximately $24,000 to the price of a new home,” said Robert Dietz, chief economist for the NAHB. “And mortgage engage rates, while historically low, have increased about 30 basis points over the last month.”
Mount costs are particularly hard on first-time homebuyers, as the supply on the lower end of the market is leanest. Any increase in mortgage rates also taps some buyers out of the market, not just because monthly payments are higher but because in today’s tight lending sell, they will no longer qualify for the loan.
Regionally, on a three-month moving average, builder sentiment in the Northeast take place 2 points to 80. In the Midwest it fell 1 point to 80 and in the South dropped 2 points to 82. In the West, sentiment knock 3 points to 90.