Builders remain confident, but the National Association of Home Builders (NAHB) saw a one point drop (from 84 to 83, where 50 is normal) in their confidence index on inflation due to the risings costs of materials.
Inflation and supply chain disruptions halted the 4 month increase in builder sentiment.
Higher material costs and lack of availability are adding weeks to typical single-family construction times… 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.
Chuck Fowke, NAHB Chairman
The HMI data was collected during the first two weeks of January and does not fully reflect the recent jump in mortgage interest rates… 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.
Robert Dietz, NAHB Chief Economist