The National Association of Home Builders/Wells Fargo Housing Market Index decreased by 2 points to 82 in March.
NAHB Chairman Chuck Fowke noted that strong buyer demand has continued into the new year but increases for material costs and delivery times, especially for lumber, has lowered builder sentiment for the month.
“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.”
The HMI component measuring buyer traffic was 72. The component measuring current sales conditions fell three points to 87, while the component measuring sales expectations in the next six months increased three points to 83.
Looking at the three-month moving averages for regional HMI scores, the Northeast rose two points to 80, the Midwest fell one point to 80, the South dropped two points to 82 and the West posted a three-point loss to 90.
Read the NAHB release.