NAHB: Builder confidence stays strong in May despite concerns about materials costs

by John Yellig

The NAHB/Wells Fargo Housing Market Index.

Builder confidence was steady in May, carrying over April’s reading of 83 for another month, according to the most recent National Association of Home Builders/Wells Fargo Housing Market Index.

The steady score came despite increasing concerns over the cost and availability of building materials, lumber in particular, the NAHB said in a release.

“Low interest rates are supporting housing affordability in a market where the cost of most materials is rising,” NAHB Chief Economist Robert Dietz said. “In recent months, aggregate residential construction material costs were up 12% year over year, and our surveys suggest those costs are rising further. Some builders are slowing sales to manage their own supply chains, which means growing affordability challenges for a market in critical need of more inventory.”

Dietz added that rising home prices are expected to continue through the year due to the cost of materials, land and labor.

The index’s measure of current sales conditions also held steady, at 88, while the six-month sales-expectations reading rose one point to 81. The buyer-traffic component of the index slid one point to 73.

Regionally, the three-month moving average of the index rose one point in the South to 84, while the West was flat at 90, the Northeast dropped four points to 82, and the Midwest slid three points to 75.

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 a seasonally adjusted index in which any number over 50 indicates that more builders view conditions as good than poor.

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