top of page
Search

Chances of a Buyers Market Crushed By Supply Chain Issues



Feb.’s confidence index fell another point. It’s a still-strong 82, but “many builders wait months to receive cabinets, garage doors, countertops and appliances.”


WASHINGTON – Despite strong buyer demand, builder sentiment continued to slip in February. According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), the industry grapples with ongoing building material production bottlenecks that raise construction costs and delay projects.


Builder confidence in the market for newly built single-family homes moved one point lower to 82 in February, the second straight month that levels declined by a single point. Despite these monthly declines, however, the HMI has posted solid readings at or above the 80-point mark for the past five months.


“Production disruptions are so severe that many builders wait months to receive cabinets, garage doors, countertops and appliances,” says NAHB Chairman Jerry Konter. “These delivery delays are raising construction costs and pricing prospective buyers out of the market. Policymakers must make it a priority to address supply chain issues that are harming housing affordability.”


“Residential construction costs are up 21% on a year-over-year basis, and these higher development costs have hit first-time buyers particularly hard,” adds NAHB Chief Economist Robert Dietz. “Higher interest rates in 2022 will further reduce housing affordability, even as demand remains solid due to a lack of resale inventory.”


Index components: The HMI index gauging current sales conditions increased one point to 90, though the gauge measuring sales expectations over the next six months fell two points to 80, and the component charting traffic of prospective buyers posted a four-point decline to 65.


Looking at the three-month moving averages for regional HMI scores, the Northeast increased three points to 76, the West rose one point to 89, the Midwest fell one point to 73 and the South – which includes Florida – edged one point lower to 86.


Derived from a monthly survey that NAHB has been conducting for more than 35 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.


26 views0 comments

Comments


bottom of page