Single-family builder confidence remained unchanged this month from last, resting at a high 83 amid a hot housing market and rising building materials costs. Any number above 50 is seen as positive. CNBC reports that builders continue to receive a steady stream of buyers, due largely to the record low housing inventory and mortgage rates. But construction material costs are up 12%, according to the National Association of Home Builders. Home prices will continue to rise to reflect material, labor, and land costs, says Robert Dietz, NAHB’s chief economist. Some builders are attempting to slow their sales to manage their supply chains as well.
The index had plummeted to 37 last May, as the pandemic lockdown hit and the housing market shut down. It then rebounded dramatically in June and July, as consumers rushed out to buy suburban homes, seeking more space for working and schooling from home.
Builders now say they continue to see a steady stream of buyers, due in large part to the extreme shortage of existing homes for sale. Continued low mortgage rates are helping some with affordability, but with prices rising fast, purchasing power is weakening.
“First-time and first-generation homebuyers are particularly at risk for losing a purchase due to cost hikes associated with increasingly scarce material availability,” said Chuck Fowler, National Association of Home Builders chairman and a homebuilder from Tampa, Florida.