U.S. Homebuilder Sentiment Drops to 13-Month Low as Costs Bite

(Bloomberg) -- U.S. homebuilder sentiment fell to a 13-month low in August amid high prices and costs as well as continuing supply shortages.

A gauge of builder sentiment decreased for a third month to 75 from a July reading of 80, the largest drop since April 2020, National Association of Home Builders/Wells Fargo data showed Tuesday. The median forecast in a Bloomberg survey of economists called for no change in the index from the month before.

Although recent price declines in building materials like lumber are good news for builders, strong demand and low inventories are keeping some buyers out of the market. As supply-chain constraints begin to improve, prospective buyers are more likely to encounter expanded options and less-elevated prices in the near future, according to the NAHB.

“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,” NAHB Chief Economist Robert Dietz said in a statement. “Our expectation is that production bottlenecks should ease over the coming months and the market should return to more normal conditions.” 

The report also showed that current sales conditions and prospective buyer traffic fell to levels not seen since July 2020. At the same time, sales expectations for the next six months remained unchanged.

The Midwest and the South posted decreases in August, reaching the lowest sentiment levels since last summer. Meanwhile, the Northeast and the West slightly rose.

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