Sentiment among U.S. homebuilders fell in June to match the lowest level this year, reflecting sharply elevated lumber costs, according to a report Monday from the National Association of Home Builders/Wells Fargo.
The Housing Market Index fell 2 points to 68 in June. May's reading of 70 temporarily snapped a four-month slide. Any reading above 50 indicates more builders see sales conditions as good rather than poor. The index has remained above 60 since September 2016.
The gauge for the six-month sales outlook fell from 77 to 76, the lowest since November; the current-sales measure for single-family homes dropped a point to 75; the gauge of prospective-buyer traffic cooled from 51 to 50, a seven-month low.
Tariffs on lumber and other imported materials are making construction more expensive, which in turn limits affordability for prospective buyers, according to the builders association. Higher lumber prices have added nearly $9,000 to the price of a new single-family home since January 2017, the Washington-based group said. Lumber prices rose to a record in May.
"Builders are increasingly concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability," association chairman Randy Noel, a custom-home builder from Louisiana, said in a statement. At the same time, "builders are optimistic about housing market conditions as consumer demand continues to grow."
Higher mortgage rates, a shortage of affordably priced listings and soaring property values have also made purchases less attractive, especially for people entering the market for the first time. Even so, while the index has fallen in five of six months this year, developers' confidence isn't far from an 18-year high reached in December: A strong job market, bigger after-tax paychecks and improving finances are supporting demand.
Sales of new U.S. homes fell 1.5 percent in April, according to the Commerce Department. The National Association of Realtors reported a 2.5 percent drop in existing-home sales in April.
Information for this article was contributed by Shobhana Chandra and Alex Tanzi of Bloomberg News and by The Associated Press.
Business on 06/19/2018