Strong buyer demand appears to be offsetting concerns
about labor shortages and rising prices, keeping builder confidence near
historic highs the National Association of Home Builders (NAHB) said on Monday.
The NAHB/Wells Fargo Housing Market Index (HMI), a measure of that confidence
in the new home market, was at 80 in July, down 1 point from its June level.
NAHB Chief Economist Paul Emrath said “Among the supply-side challenges,
the price of OSB (oriented strand board) has been a particular problem
lately. As of July 8, the price of OSB has skyrocketed to more than 500
percent above its January 2020 level. Such cost increases are putting
upward pressure on home prices and sidelining many prospective home
buyers. The situation has become so extreme that the White House recently
heeded NAHB’s request to bring together stakeholders for a supply chain summit on
Derived from a monthly survey that
NAHB has been conducting for 35 years, the Index gauges builder perceptions of
current single-family home sales and sales expectations for the next six months
as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of
prospective buyers as “high to very high,” “average” or “low to very low.”
Scores for each component are then used to calculate a seasonally adjusted
index where any number over 50 indicates that more builders view conditions as
good than poor.
The three major HMI indices were
mixed in June. The component measuring current sales conditions fell one point
to 86, the component measuring traffic of prospective buyers dropped six points
to 65 and the gauge charting sales expectations in the next six months posted a
two-point gain to 81.
Looking at the three-month moving
averages for regional HMI scores, the Northeast fell four points to 75, the
Midwest moved one-point lower to 71 and the West posted a two-point decline to
87. The South held steady at 85.