As supply chain issues and material costs worsen, homebuilder confidence worsens.
Homebuilder Confidence Levels Down
For the second consecutive month, homebuilder confidence fell in February by -2 points to 82 points, according to the National Association of Homebuilders (NAHB)/ Wells Fargo Housing Market Index.
(Any point score above 50 is considered to be a positive confidence level for members of the NAHB.)
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Specifics of Homebuilder Confidence Levels
With the total homebuilder confidence level coming in at 82, take a look at the three components of this total score:
- Current sales conditions +1 point to 90
- Sales expectations over next 6 months -2 points to 80
- Buyer traffic down -4 points to 65
Regionally, homebuilder confidence looked like this in February:
- Northeast – -3 points to 76 points
- West – +1 point to 89 points
- Midwest – -1 point to 73 points
- South – -1 point to 86 points
Supply Chain Issues & Supply Prices for Homebuilders Considered Culprits
About a week ago, we posted an article here about increasing costs of home-construction materials. Here’s another way to look at these escalating costs:
- Softwood Lumber – +19% – 26% (check out our companion article this week)
- Steel Products – astonishing +113%
- Concrete – +9%
- Gypsum – +23%
- Exterior Paint – +30%
In terms of supply chain disruptions, NAHB Chairman Jerry Konter, a homebuilder from Savannah GA, said, “Production disruptions are so severe that many builders are waiting months to receive cabinets, garage doors, countertops and appliances.”
Residential Construction Costs Soaring
Robert Dietz, NAHB’s chief economist, said, “Residential construction costs are up +21% on a year-over-year basis, and these higher development costs have hit first-time buyers particularly hard. Higher interest rates in 2022 (mid-February +4.03% from 3.83%) will further reduce housing affordability even as demand remains solid due to a lack of resale inventory.”
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