The NAHB/Wells Fargo Housing Market Index—a measure of builder confidence in the newly built single-family home market—shifted down one point to 80 in July, continuing a trend of record-high confidence on a slow decline.

Sustained demand from new home buyers continues to offset the impact of the industry’s struggles, particularly supply-side challenges. “Builders are contending with shortages of building materials, buildable lots, and skilled labor as well as a challenging regulatory environment,” says 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.”

The three major indices that make up the HMI showed mixed results. The HMI gauging current sales conditions fell one point to 86, the measure of traffic of prospective buyers fell six points to 65, and the index measuring sales expectations in the next six months rose two points to 81. (Any number above 50 indicates that more builders view conditions as good than as poor.)

At the regional level, the Northeast’s three-month moving average HMI fell four points to 75 in July. The Midwest’s three-month moving average HMI fell one point to 71, the West’s fell two points to 87, and the South’s remained at 85.

“Builders continue to grapple with elevated building material prices and supply shortages, particularly the price of oriented strand board, which has skyrocketed more than 500% above its January 2020 level,” says NAHB chairman Chuck Fowke. “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.”