Builder confidence dropped four points in December to a level of 86 on the NAHB/Wells Fargo Housing Market Index.
Despite the decline, the reading is still the second-highest ever recorded in the 35-year history of the index following November’s record-setting level of 90.
"Housing demand is strong entering 2021, however the coming year will see housing affordability challenges as inventory remains low and construction costs are rising," NAHB Chairman Chuck Fowke said in a statement. "Policymakers should take note to avoid increasing regulatory costs associated with land development and residential construction."
Builder confidence levels above 50 indicate more home builders view the market as positive than negative, according to NAHB.
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