U.S. Homebuilder Sentiment Fell in June on Higher Lumber Costs

(Bloomberg) -- Sentiment among U.S. homebuilders fell in June to match the lowest level this year, reflecting sharply elevated lumber costs, according to a report Monday from the National Association of Home Builders/Wells Fargo.

Highlights of Homebuilder Sentiment (June)

  • Housing Market Index declined to 68 (est. 70) from 70 in May
  • Gauge of six-month sales outlook fell to 76, lowest since November, from 77
  • Current-sales measure for single-family homes decreased to 75 from 76; gauge of prospective buyer traffic cooled to seven-month low of 50, from 51

Key Takeaways

Tariffs on lumber and other imported materials are making construction more expensive, which in turn limits affordability for prospective buyers, according to the NAHB. Higher lumber prices have added nearly $9,000 to the price of a new single-family home since January 2017, the Washington-based group said. Lumber prices rose to a record in May.

Higher mortgage rates, a shortage of affordably-priced listings, and soaring property values have also made purchases less attractive, especially for people entering the market for the first time. Even so, while the index has fallen in five of six months this year, developers’ confidence isn’t far from an 18-year high reached in December: A strong job market, bigger after-tax paychecks and improving finances are supporting demand.

Official’s View

“Builders are increasingly concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability,” NAHB Chairman Randy Noel, a custom-home builder from Louisiana, said in a statement. At the same time, “builders are optimistic about housing market conditions as consumer demand continues to grow.”

Other Details

  • Index fell to 64 in the Midwest from 67; dropped to 69 in the South from 71
  • Confidence rose to 61 in the Northeast from 56; West posted a gain to 76 from 75

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