The arrival of spring — and with it, homebuying season — isn’t improving the outlook of homebuilders.
The National Association of Home Builders/Wells Fargo Housing Market Index dropped to 82, seasonally adjusted, compared to February’s reading of 84. The index tracks homebuilder confidence in current and future single-family home sales and traffic of potential homebuyers on a monthly basis.
The fall comes after last month’s gain broke the index’s two-month streak of month-over-month declines. The organization’s chief economist Robert Dietz said it’s part of a downward trend that began after November’s peak, as home prices have skyrocketed and inventory hit historic lows.
Homebuilder sentiment toward current single-family home sales dropped to 87, compared to February’s reading of 90, while traffic from prospective buyers remained flat. Expectations of single-family home sales six months from now increased to 83 from 80 the prior month. All of the components were up year-over-year.
Regional sentiment largely followed the national index. All regions saw a month-over-month decline in March, except for the southern region, where the reading was flat.
NAHB chairman Chuck Fowke attributed the drop in sentiment to increased costs, particularly for softwood lumber. Some in the housing industry are calling on President Joe Biden’s administration to take action to address the soaring cost of lumber.
Thirty-seven organizations recently signed onto a letter addressed to Commerce Secretary Gina Raimondo, asking her office to “examine the lumber supply chain, identify the causes for high prices and supply constraints, and seek immediate remedies that will increase production,” Bloomberg News reported.