Builder Confidence Down on Rising Material Prices, Upsurge in COVID-19 Cases

Rising material costs led by a huge upsurge in lumber prices along with a resurgence of the coronavirus across much of the nation pushed builder confidence in the market for newly built single-family homes down three points to 83 in January, according to the latest NAHB/Wells Fargo Housing Market Index (HMI). Despite the drop, builder sentiment remains at a strong level.

"Despite robust housing demand and low mortgage rates, buyers are facing a dearth of new homes on the market, which is exacerbating affordability problems," said NAHB chairman Chuck Fowke, a custom home builder from Tampa, Fla. "Builders are grappling with supply-side constraints related to lumber and other material costs, a lack of affordable lots and labor shortages that delay delivery times and put upward pressure on home prices. They are also concerned about a changing regulatory environment."