As buyer traffic weakened, home builders grew more pessimistic about the new home market. Many continue to worry about the impact from decreasing affordability.
An indication of home builder confidence, the Housing Market Index, was calculated to be 67 as of August. An index in excess of 50 indicates that more builders view conditions as good than poor.
This month’s index moved lower by a point from a month earlier and also turned out to be the lowest index level since September 2017, when hurricanes brought down builder confidence.
Interestingly, there has been no change in the index compared to a year earlier.
The National Association of Home Builders reported the index Wednesday. The index is maintained in conjunction with Wells Fargo.
NAHB Chairman Randy Noel noted in the report that affordability concerns are preoccupying builders thanks to rising construction costs, skilled labor shortages and a lack of build-able lots.
NAHB Chief Economist Robert Dietz added his observations.
“Builders continue to monitor how tariffs and the growing threat of a trade war are affecting key building material prices, including lumber,” Dietz stated. “These cost increases, coupled with rising interest rates, are putting upward pressure on home prices and contributing to growing affordability challenges.”
Among three components that make up the index is the index reflecting current buyer traffic — which fell two points to 49.
A second component, the one measuring current sales conditions, slipped a point to 73.
Also retreating a point was the component gauging expectations over the next six months, to 72.
On a regional basis, the three-month moving average for the index in the Northeast fell three points to 54. A three-point decline left the index in the Midwest at 62.
But the index was unchanged in the South at 70 and in the West at 75.
