U.S. builder confidence unexpectedly drops in July

The National Association of Homebuilders (NAHB) announced on Monday its housing market index (HMI) stood at 80 in July, down from 81 in June. This was the lowest reading since August 2020.

Economists had forecast the HMI to increase to 82.

A reading over 50 indicates more builders view conditions as good than poor.

The three HMI components were mixed this month. The indicator gauging current sales conditions declined 1 point to 86 and the component measuring traffic of prospective buyers plunged 6 points to 65, while the measure charting sales expectations in the next six months rose 2 points to 81.

NAHB Chairman Chuck Fowke noted: “Builders continue to grapple with elevated building material prices and supply shortages, particularly the price of oriented strand board, which has skyrocketed more than 500 percent above its January 2020 level. We are grateful that the White House heeded our urgent plea to hold a building materials meeting with interested stakeholders on July 16 to seek solutions to end production bottlenecks that have harmed housing affordability.”

Meanwhile, NAHB Chief Economist Robert Dietz said: “Builders are contending with shortages of building materials, buildable lots and skilled labor as well as a challenging regulatory environment. This is putting upward pressure on home prices and sidelining many prospective home buyers even as demand remains strong in a low-inventory environment.”