Market news

17 August 2021

U.S. builder confidence unexpectedly declines in August

The National Association of Homebuilders (NAHB) announced on Tuesday its housing market index (HMI) stood at 75 in August, down from 80 in July. This was the lowest reading since July 2020.

Economists had forecast the HMI to remain unchanged at 80.

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

Two of three HMI components recorded declines this month. The indicator gauging current sales conditions fell 5 points to 81 and the component measuring traffic of prospective buyers also dropped 5 points to 60. Meanwhile, the measure charting sales expectations in the next six held steady at 81.

NAHB Chairman Chuck Fowke noted: “Buyer traffic has fallen to its lowest reading since July 2020 as some prospective buyers are experiencing sticker shock due to higher construction costs. Policymakers need to find long-term solutions to supply-chain issues.”

Meanwhile, NAHB Chief Economist Robert Dietz said: “While the demographics and interest for home buying remain solid, higher costs and material access issues have resulted in lower levels of home building and even put a hold on some new home sales. While these supply-side limitations are holding back the market, our expectation is that production bottlenecks should ease over the coming months and the market should return to more normal conditions.”

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