Homebuilder confidence dropped for the second month in a row in February as bottlenecks in the production of building materials continued to raise construction costs and delay projects, the National Association of Home Builders reported, citing the latest NAHB/Wells Fargo Housing Market Index (HMI).
February’s reading of 82 was down one point from January, the NAHB said in a press release. Despite the declines, the HMI has remained at or above 80 for the last five months, NAHB noted. Any reading above 50 indicates that more builders view conditions as good than poor.
The index’s measure of current sales conditions rose one point to 90, while the six-month sales-expectations measurement dipped two points to 80. The buyer-traffic component fell four points to 65.
“Production disruptions are so severe that many builders are waiting months to receive cabinets, garage doors, countertops and appliances,” NAHB Chairman Jerry Konter said. “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.”
Regionally, the three-month moving average of the index jumped three points in the Northeast to 76 and rose a point in the West. It fell one point apiece in the South and Midwest to 86 and 73, respectively.
The NAHB/Wells Fargo survey measures builder perceptions of current single-family home sales, as well as 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.” The results are then used to calculate the seasonally adjusted index.