Builder confidence drops in June

HomeNewsBuilder confidence drops in June

Washington, D.C.—Rising material prices and supply chain shortages resulted in builder confidence dipping to its lowest level since August 2020, according to the National Association of Home Builders (NAHB).

The latest NAHB/Wells Fargo Housing Market Index (HMI) shows that builder confidence in the market for newly built single-family homes fell two points to 81 in June. Despite the monthly decline, the reading above 80 is still a signal of strong demand in a housing market lacking inventory.

“Higher costs and declining availability for softwood lumber and other building materials pushed down builder sentiment in June,” said Chuck Fowke, NAHB chairman. “These higher costs have moved some new homes beyond the budget of prospective buyers, which has slowed the strong pace of home building. Policymakers need to focus on supply-chain issues in order to allow the economic recovery to continue.”

NAHB chief economist, Robert Dietz, said, “While builders have adopted a variety of business strategies including price escalation clauses to deal with scarce building materials, labor and lots, unavoidable increases for new home prices are pushing some buyers to the sidelines. Moreover, these supply constraints are resulting in insufficient appraisals and making it more difficult for builders to access construction loans.”

Derived from a monthly survey that NAHB has been conducting for 35 years, the HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” 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.

All three of the major HMI indices posted declines in June:

  • current sales conditions fell two points to 86
  • sales expectations in the next six months posted a two-point decline to 79
  • traffic of prospective buyers dropped two points to 71

Looking at the three-month moving averages for regional HMI scores:

  • the South rose one point to 85
  • the West fell one point to 89
  • the Midwest dropped three points to 72
  • the Northeast posted a five-point decline to 78

Must Read

Crossville introduces Rural Retreat

Crossville, Tenn.—Crossville is introducing its first line of wood-look porcelain tiles created especially for residential interiors and exteriors. The visual of American-made Rural Retreat is inspired...

Flooring Sustainability Summit 2025 returns to Washington

Washington, D.C.—Flooring industry leaders have announced the return of the Flooring Sustainability Summit, set for July 16-17, here. Building on the success of last...

All Surfaces welcomes Mechelle Bliss to the team

Bloomington, Minn.—All Surfaces, a distributor and leader in flooring solutions, has welcomed Mechelle Bliss as the company’s new commercial business development specification manager. With a...

Lumber Liquidators: Part 2

The industry was taken somewhat by surprise when Tom Sullivan, the embattled founder of LL Flooring (formerly Lumber Liquidators) swooped in at the 11th...

Are you being scammed?

In late 2022, Sarasota, Fla.-based Floors4Pros received an order for materials. The sale was made over the phone, a DocuSign was sent and signed...

AHF’s Brian Carson announces departure

Mountville, Pa.—AHF Products announced the departure of Brian Carson, president and CEO, following a successful six-year tenure at the helm of the company. Carson...
Some text some message..
X