But affordability is a concern
Builders still believe that the market for newly-built single-family homes remains strong but are concerned about rising costs impacting affordability.
The National Association of Home Builders/Wells Fargo Housing Market Index posted a reading of 67 in July, down 1 point from June.
“The good news is that builders continue to report strong demand for new housing, fueled by steady job and income growth along with rising household formations,” said NAHB Chairman Randy Noel. “However, they are increasingly focused on growing affordability concerns, stemming from rising construction costs, shortages of skilled labor and a dearth of buildable lots.”
The association’s chief economist, Robert Dietz, added that tariffs and the threat of trade wars are a concern in a market that also has other cost challenges.
“These cost increases, coupled with rising interest rates, are putting upward pressure on home prices and contributing to growing affordability challenges.”
However, he believes that the growth in the economy and labor market will ultimately drive further demand for new single-family homes in the months ahead.
Regional scores
Looking at the three-month moving averages for regional HMI scores, the South and West each held steady at 70 and 75, respectively. The Northeast fell three points to 54 and the Midwest also posted a three-point decline to stand at 62.
