Photo: Robert Clark
US homebuilders were feeling confident about the housing market in July as demand for housing increased.
But rising material costs — Canadian lumber, in particular — are making it increasingly difficult for builders to deliver competitively priced homes, according to a newly released report by the National Association of Home Builders (NAHB).
The Trump administration imposed tariffs on Canadian lumber last summer, and NAHB reports that record-high lumber prices have added nearly $9,000 to the price of a new single-family home since January 2017.
“Builders need to manage these cost increases as they strive to provide competitively priced homes, especially as more first-time home buyers enter the housing market,” NAHB Chief Economist Robert Dietz says in the digital release.
Last month First American, a title insurance and settlement services provider, reported that low inventory coupled with high home prices were perhaps the biggest obstacles facing first-time homebuyers in today’s ultra-competitive housing market.
Since the previous month, single-family homebuilder confidence remained unchanged at a “solid” 68 reading on NAHB Housing Market Index (HMI) in July.
The HMI is derived from a monthly survey conducted by NAHB that gauges homebuilder perceptions of current single-family homes sales and future expectations, as well as buyer foot traffic. Any score over 50 indicates that builders view conditions as “good” as opposed to “poor.”
The HMI component that measure current sales and market conditions remained at a reading of 74 in July, unchanged from the previous month. At the same time, buyer foot traffic rose two points to a reading of 52 in July — indicating growing demand.
“Consumer demand for single-family homes is holding strong this summer, buoyed by steady job growth, income gains and low unemployment in many parts of the country,” NAHB Chairman Randy Noel says.
However, homebuilders weren’t feeling as optimistic about market conditions six months down the road. The HMI component that gauges future expectations slipped two points to a reading of 73 in July.
Click here to read the entire release.