【World Property Journal】U.S. Builder Sentiment Slips From Higher Material Costs, Interest Rate Increases

The latest National Association of Home Builders / Wells Fargo Housing Market Index released this week shows that U.S. builder confidence in the market for newly built single-family homes fell two points to 82 in March 2021.

Despite high buyer traffic and strong demand, builder sentiment fell from rising lumber and other material prices pushed builder confidence lower.

"Though builders continue to see strong buyer traffic, recent increases for material costs and delivery times, particularly for softwood lumber, have depressed builder sentiment this month," said NAHB Chairman Chuck Fowke. "Supply shortages and high demand have caused lumber prices to jump about 200 percent since last April. Policymakers must address building material supply chain issues to help the economy sustain solid growth in 2021."

"Builder confidence peaked at a level of 90 last November and has trended lower as supply-side and demand-side factors have trimmed housing affordability," said NAHB Chief Economist Robert Dietz. "While single-family home building should grow this year, the elevated price of lumber is adding approximately $24,000 to the price of a new home. And mortgage interest rates, while historically low, have increased about 30 basis points over the last month. Nonetheless, the lack of resale inventory means new construction is the only option for some prospective home buyers."

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