Builder confidence dropped two points in March to a level of 82 on the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index.
The level is still considered strong despite the drop, as any number above 50 indicates more builders view conditions as “good” than “poor,” according to NAHB.
NAHB attributed the decline to rising material costs, particularly for softwood lumber.
"Supply shortages and high demand have caused lumber prices to jump about 200 percent since last April,” NAHB Chairman Chuck Fowke stated. “Policymakers must address building material supply chain issues to help the economy sustain solid growth in 2021."
The elevated price of lumber is adding an estimated $24,000 to the price of a new home, according to NAHB Chief Economist Robert Dietz.
“Mortgage interest rates, while historically low, have increased about 30 basis points over the last month,” Dietz stated. “Nonetheless, the lack of resale inventory means new construction is the only option for some prospective home buyers."
