Homebuilder confidence slipped to a four-month low in January as firms became slightly less optimistic about sales against a backdrop of higher house prices and construction costs.
A gauge of builder sentiment fell to 83 from December’s reading of 86, National Association of Home Builders data showed Wednesday. The figure was weaker than the median forecast of 86 in Bloomberg’s survey of economists.
The second-straight decline in confidence shows the extent to which higher building materials costs, particularly lumber, and rising home prices tied to lean inventory are slowing momentum. Builders continue to face pandemic-related supply-chain challenges at the same time elevated asking prices hinder affordability, with many homes priced above what prospective buyers are willing to pay.
“While housing continues to help lead the economy forward, limited inventory is constraining more robust growth,” Robert Dietz, NAHB chief economist, said in a statement. “A shortage of buildable lots is making it difficult to meet strong demand and rising material prices are far outpacing increases in home prices, which in turn is harming housing affordability.”
A gauge of current sales fell to a three-month low, while measures of sales expectations in the next six months and prospective homebuyer traffic both declined to the lowest since August.
Confidence measures decreased across all four regions across the U.S.