Homebuilders might be starting to feel some pressures of scarce labor and rising prices as sentiment slipped to a four-month low in June, though it remains near the highest in almost 12 years, according to data Thursday from the National Association of Home Builders/Wells Fargo.
The Builders' Housing Market Index decreased to 67 (the estimate was 70) from 69 in May (revised from 70); had reached 71 in March, the highest since June 2005. The measure of the six-month sales outlook eased to 76 from 78. The index of current sales dropped to 73, the lowest since February, after 75.
While still quite strong, the figures might be hinting at an easing of optimism in an industry where more workers are desperately needed to break ground on new projects. Businesses might also be less confident since post-election buoyancy has given way to legislative gridlock, meaning deregulation and promised tax reform are slow to materialize.
Even so, muted borrowing costs are still feeding robust demand, with mortgage rates almost fully retracing a post-election surge and remaining just about a half-percentage-point above the record low since 1971, according to Freddie Mac data. Faster wage gains would help narrow the gap with the pace of property prices, allowing more Americans to feel comfortable making the big purchase.
"As the housing market strengthens and more buyers enter the market, builders continue to express their frustration over an ongoing shortage of skilled labor and buildable lots that is impeding stronger growth in the single-family sector," NAHB Chief Economist Robert Dietz said in a statement.
Readings greater than 50 indicate more respondents reported good market conditions. The gauge of prospective-buyer traffic fell to 49, a four-month low, from 51. Confidence decreased in three of four regions, led by a nine-point plunge in the West to its lowest level since August. Builder sentiment in the Northeast and South also dropped while it gained in the Midwest.
