Homebuilder confidence dropped for the fourth month in a row in March as bottlenecks in the production of lumber and building materials continued to raise construction costs and delay projects ahead of what is expected to be a hike in interest rates, the National Association of Home Builders reported, citing the latest NAHB/Wells Fargo Housing Market Index (HMI).
March’s index of 79 was down two points from February’s downwardly revised reading, the NAHB said in a press release. March marks the first time the HMI has fallen below 80 since September 2021, NAHB noted. Any reading above 50 indicates that more builders view conditions as good than poor.
The index’s measure of current sales conditions fell three points to 86, while the six-month sales-expectations measurement plunged 10 points to 70. The buyer-traffic component rose two points to 67.
Regionally, the three-month moving average of the index fell seven points in the Northeast to 69 and dropped three points in the South to 83. It fell one point in the Midwest to 72 and rose a point in the West to 90.
The NAHB/Wells Fargo survey measures builder perceptions of current single-family home sales, as well as 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.” The results are then used to calculate the seasonally adjusted index.