Builder Confidence at 13-Month Low on Higher Material Costs, Home Prices

Economics
Published

Higher construction costs and supply shortages along with rising home prices pushed builder confidence to its lowest reading since July 2020, according to the NAHB/Wells Fargo Housing Market Index (HMI) released today. Builder sentiment in the market for newly built single-family homes fell five points to 75 in August.

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

“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,” said NAHB Chief Economist Robert Dietz. “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.”

Derived from a monthly survey that NAHB has been conducting for 35 years, the NAHB/Wells Fargo HMI 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 HMI index gauging current sales conditions fell five points to 81 and the component measuring traffic of prospective buyers also posted a five-point decline to 60. The gauge charting sales expectations in the next six months held steady at 81.

Looking at the three-month moving averages for regional HMI scores, the Northeast fell one point to 74, the Midwest dropped two points to 68, the South posted a three-point decline to 82 and the West registered a two-point drop to 85.

HMI tables can be found at nahb.org/hmi. More information on housing statistics is also available at Housing Economics PLUS.

Single-family home builders are invited to join the exclusive group of NAHB members who participate each month in the HMI survey. To begin receiving the monthly HMI surveys, please submit this form.

Subscribe to NAHBNow

Log in or create account to subscribe to notifications of new posts.

Log in to subscribe

Latest from NAHBNow

Economics

May 23, 2025

Volatile Spring Selling Season Continues

Sales of newly built, single-family homes in April increased 10.9% to a 743,000 seasonally adjusted annual rate from a downwardly revised March number, according to newly released data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The pace of new home sales in April was up 3.3% compared to a year earlier.

Material Costs

May 22, 2025

NAHB Members Cite Impact of Tariff Uncertainty on Home Building

Tariff uncertainty from the Trump administration continues to impact home builders across the country, as builders prepare for potential price hikes and supply chain issues. NAHB members have been sharing the impact that these tariffs are having with media outlets across the United States.

View all

Latest Economic News

Economics

May 22, 2025

Existing Home Sales Fall in April

Despite the brief retreat in mortgage rates and increased supply, existing home sales dropped to 7-month low in April, according to the National Association of Realtors (NAR). This unexpected decline suggests buyers’ activity continues to be constrained by economic uncertainty and ongoing affordability challenges even with improved market conditions.

Economics

May 22, 2025

Income Growth Helps Mute Existing Affordability Constraints

Despite solid income gains and lower home prices, Americans still continue to face major housing affordability challenges, according to the latest data from the National Association of Home Builders (NAHB)/Wells Fargo Cost of Housing Index (CHI).

Economics

May 21, 2025

Gains for Multifamily Missing Middle over Last Year

The missing middle construction sector includes development of medium-density housing, such as townhouses, duplexes and other small multifamily properties.