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News Aug. 18, 2021

Homebuilder sentiment slipped in August

Builder sentiment dropped five points to 75 in August amid rising materials costs and labor shortages, according to cnbc.com. It reached a record high of 90 in November 2020.

Any reading above 50 indicates a positive market; the National Association of Home Builders/Wells Fargo Housing Market Index had fallen to 30 in April 2020.

Of the homebuilder index’s three components, current sales conditions fell five points to 81; sales expectations in the next six months were unchanged at 81; and buyer traffic declined five points to 60.

“Some prospective buyers are experiencing sticker shock due to higher construction costs,” said NAHB Chairman Chuck Fowke, a homebuilder from Tampa, Fla. “Policymakers need to find long-term solutions to supply chain issues.”

Although lumber prices have fallen in the lumber futures market, the price and availability of other materials remain a challenge.

“While the demographics and interest for home buying remain solid, higher costs and material access issues have resulted in lower levels of home building and even put a hold on some new home sales,” said Robert Dietz, chief economist for NAHB.

However, Dietz expects production bottlenecks to ease during the coming months and the market to return to more normal conditions.

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