United States homebuilder confidence dips to an eight-month low

Joanna Estrada
July 19, 2017

The homebuilder optimism dropped two points for the second consecutive month, as gauged by the NAHB housing market index. The West remains the strongest for homebuilders followed by the Midwest and South.

On the USA economic front, homebuilder confidence unexpectedly declined in the month of July, according to a report released by the National Association of Home Builders.

The index showed demand for new homes, meanwhile, remains strong. The survey also asks builders how they think turnout will be among potential buyers on a three-tiered scale: high, average, or low.

Although the reading of 64 is still solid, it is the lowest mark since November 2016 and reflects concern of builders in several key factors. June new-home sales data are due out next week.

Builders are faced with a tough choice when dealing with higher materials costs such as lumber-either raise prices on homes or absorb the added expense.

But a shortage of available building lots has tempered new construction.

March's 71 reading represented a 12-year high.

"Our members are telling us they are growing increasingly concerned over rising material prices, particularly lumber", said NAHB Chairman Granger MacDonald.

This month's builder index was based on 354 respondents.

Home builders' expectations regarding present and expected single-family home sales both fell in July, down to 70 and 73, in order, while expected homebuyer traffic fell to 48. Mirroring the headline index, all the three components - current sales, future sales and prospective buyer traffic - dropped on the month but all continue to be strongly in positive territory.

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