Home Builder Confidence Dips Due To Inflation And Supply Chain Concerns

Inflation concerns and the continued disruption in supply chain caused a four-month rise in home builder confidence to slide, despite a boost in consumer demand, according to the NAHB and Wells Fargo's Housing Market Index.

“Higher material costs and lack of availability are adding weeks to typical single-family construction times,” said NAHB Chairman Chuck Fowke. “NAHB analysis indicates the aggregate cost of residential construction materials has increased almost 19% since December 2021. Policymakers need to take action to fix supply chains. Obtaining a new softwood lumber agreement with Canada and reducing tariffs is an excellent place to start.”

“The HMI data was collected during the first two weeks of January and do not fully reflect the recent jump in mortgage interest rates,” said NAHB Chief Economist Robert Dietz. “While lean existing home inventory and solid buyer demand are supporting the need for new construction, the combination of ongoing increases for building materials, worsening skilled labor shortages and higher mortgage rates point to declines for housing affordability in 2022.”

The NAHB reports that the HMI index gauge for current sales conditions held steady at 90. However, the gauge that measures home sales over the next six months decreased by two points to 83.