Builder confidence dropped early this year as affordability concerns continue to weigh heavily with buyers and builders continue to contend with rising construction costs, according to the latest National Association of Home Builders (Washington, D.C.)/Wells Fargo Housing Market Index (HMI).
Builder confidence in the market for newly built single-family homes fell two points to 37 in January. The HMI index gauging current sales conditions declined one point to 41, and the gauge charting traffic of prospective buyers dropped three points to 23. The index measuring future sales fell three points to 49 — marking the first time this component fell below the break-even point of 50 since September.
Looking at the three-month moving averages for regional HMI scores, the Northeast fell two points to 45, the Midwest held steady at 43, the South dropped one point to 35 and the West gained one point to 35.
“While the upper end of the housing market is holding steady, affordability conditions are taking a toll on the lower and mid-range sectors,” said NAHB Chairman Buddy Hughes, a home builder and developer from Lexington, N.C. “Buyers are concerned about high home prices and mortgage rates, with down payments particularly challenging given elevated price-to-income ratios.”
Find the full HMI tables here.
