Confidence among homebuilders in the Western U.S. slipped in January to a four-month low.
This gauge of builder sentiment fell to 92 from December’s reading of 96, National Association of Home Builders data showed. Last year, the index hit a record 98 in November six months after bottoming at 32 as the coronavirus first hit housing.
In the three other regions in January …
Northeast: Down 10 points to 68 — a seven-month low.Midwest: Down one to 81 — a three-month low.South: Down five to 82 — a five-month low.
Nationally, homebuilder confidence slipped three points to 83 — a four-month low — as firms became slightly less optimistic about sales against a backdrop of higher house prices and construction costs.
The second-straight decline in U.S. builder confidence shows the extent to which higher building materials costs, particularly lumber, and rising home prices tied to lean inventory are slowing momentum.
Builders continue to face pandemic-related supply-chain challenges at the same time elevated asking prices hinder affordability, with many homes priced above what prospective buyers are willing to pay.
“While housing continues to help lead the economy forward, limited inventory is constraining more robust growth,” Robert Dietz, NAHB chief economist, said in a statement. “A shortage of buildable lots is making it difficult to meet strong demand and rising material prices are far outpacing increases in home prices, which in turn is harming housing affordability.”
A gauge of current sales fell to a three-month low, while measures of sales expectations in the next six months and prospective homebuyer traffic both declined to the lowest since August.