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The numbers: High inflation and persistent shortages of key supplies slightly dimmed the optimism of home builders early in the new year. The National Association of Home Builders’ confidence index slipped 1 point to 83.
Key details: A measure of customer traffic at homes for sale fell a few points in January, as did a survey of sales expectations six months from now.
Big picture: Demand for housing is strong, but rising prices and higher mortgage rates could turn off some potential buyers. The survey was taken during the first two weeks of January and did not fully include the recent jump in mortgage rates.
Even bigger obstacles are ongoing shortages of labor and supplies as well as higher costs for materials such as lumber. The NAHB said the cost of building materials has surged almost 20% in the past year.
“Policymakers need to take action to fix supply chains,” said NAHB Chairman Chuck Fowke, a custom home builder in Tampa, Fla.
Looking ahead: “While lean existing home inventory and solid buyer demand are supporting the need for new construction, the combination of ongoing increases for building materials, worsening skilled labor shortages and higher mortgage rates point to declines for housing affordability in 2022,” said NAHB chief economist Robert Dietz.
Market reaction: Home-builder stocks such as Lennar Corp. LEN, -4.92%, Toll Brothers Inc. TOL, -3.88% D.R. Horton Inc. DHI, -4.26% and PulteGroup Inc. PHM, -4.01% all fell sharply in Tuesday trades.
The S&P 500 Index SPX, -1.36% and the Dow Jones Industrial Average DJIA, -1.44% also declined. Equities have deflated lately owing to the prospect of the Federal Reserve raising interest rates soon.
Source: This post first appeared on http://marketwatch.com/
