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Homebuilder confidence hit its lowest level since July 2020. While labor shortages and supply challenges played a role, buyer \u201csticker shock\u201d is the new concern.<\/span><\/span><\/p>\n<\/div>\n WASHINGTON \u2013 Higher construction costs, supply shortages and rising home prices pushed builder confidence to its lowest reading since July 2020, according to the National Association of Home Builders (NAHB)\/Wells Fargo Housing Market Index (HMI).<\/span><\/span><\/p>\n Builder sentiment in the market for newly built single-family homes fell five points to 75 in August. It\u2019s still in positive territory since anything about 50 means builders are on the happy side of the monthly study, but it\u2019s trending in a negative direction.<\/span><\/span><\/p>\n \u201cBuyer traffic has fallen to its lowest reading since July 2020 as some prospective buyers are experiencing sticker shock due to higher construction costs,\u201d says NAHB Chairman Chuck Fowke, a custom home builder from Tampa. \u201cPolicymakers need to find long-term solutions to supply-chain issues.\u201d<\/span><\/span><\/p>\n \u201cHigher costs and material access issues have resulted in lower levels of home building and even put a hold on some new home sales,\u201d adds NAHB Chief Economist Robert Dietz. \u201cWhile 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.\u201d<\/span><\/span><\/p>\n The HMI index gauging current sales conditions fell five points to 81, and the component measuring traffic of prospective buyers also posted a five-point decline to 60. The gauge charting sales expectations in the next six months held steady at 81.<\/span><\/span><\/p>\n Looking at the three-month moving averages for regional HMI scores, the Northeast fell one point to 74, the Midwest dropped two points to 68, the South posted a three-point decline to 82 and the West registered a two-point drop to 85.<\/span><\/span><\/p>\n The NAHB\/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as \u201cgood,\u201d \u201cfair\u201d or \u201cpoor.\u201d The survey also asks builders to rate traffic of prospective buyers as \u201chigh to very high,\u201d \u201caverage\u201d or \u201clow to very low.\u201d Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.<\/span><\/span><\/p>\n\n