The National Association of Home Builders (NAHB)/Wells Fargo housing market index (HMI) for July came in unchanged from June’s index reading of 68. The HMI posted an 18-year high of 74 in December 2017. Economists polled by Bloomberg were expecting an index reading of 68 for July.
NAHB Chair Randy Noel said that while demand remains strong, builders continue to be burdened with rising materials costs. Random length framing lumber fell to below $550 per thousand board feet (nearly 7%) earlier this month after rising by about 85% over the past two years.
The index is based on an NAHB monthly survey of homebuilder perceptions of current single-family home sales and expectations for sale in the next six months. An index reading above 50 indicates that more builders view sales conditions as good than view them as poor.
The current sales conditions subindex for July was unchanged at 74, and the subindex that estimates prospective buyer traffic rose two points to 52. The subindex measuring sales expectations for the next six months dropped from 75 to 73.
NAHB chief economist, Robert Dietz, said:
Builders are encouraged by growing housing demand, but they continue to be burdened by rising construction material costs. 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
In the NAHB’s regions, three-month moving average indexes dipped in two of four regions. The South’s index score fell one point to 70 and the West’s score fell from 76 to 75. In the Midwest remained unchanged at 65, and the index rose one point to 57 in the Northeast.
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