The National Association of Home Builders/Wells Fargo Housing Market Index fell by five points from July to August, falling to its lowest reading since July 2020 at 75. According to the NAHB, rising construction costs, supply shortages, and high home prices have pushed builder confidence down from 13 months of steady highs.
“Buyer traffic has fallen to its lowest reading since July 2020 as some prospective buyers are experiencing sticker shock due to higher construction costs,” says NAHB chairman Chuck Fowke. “Policymakers need to find long-term solutions to supply-chain issues.”
Of the index’s three components, the index gauging current sales condition fell five points to 81 in August 2021. The index measuring traffic of prospective buyers fell five points to 60, while the gauge of sales expectations in the next six months held at 81. (Any number over 50 indicates that more builders view conditions as good than as poor.)
At the regional level, the three-month moving average HMI for the Northeast fell one point to 74 in August. The Midwest fell two points to 68, the South fell three points to 82, and the West fell two points to 85.
“While the demographics and interest for home buying remain solid, higher costs and material access issues have resulted in lower levels of home building and even put a hold on some new-home sales,” says Robert Dietz, NAHB chief economist. “While these supply-side limitations are holding back the market, our expectation is that production bottlenecks should ease over the coming months and the market should return to more normal conditions.”
