Builder confidence falls amid high costs

Builder confidence in the market for single-family homes fell this month amid increasing material costs, higher-than-normal mortgage rates and continued affordability challenges, according to the National Association of Home Builders. .The NAHB/Wells Fargo Housing Market Index dropped two points to 35. Any reading lower than 50 shows a majority of builders do not feel confident about their current and near-term housing outlook. The index has now been below 40 for 14 months, its longest streak since 2011-12. The index tracking current sales conditions dropped two points to 38, while sales expectations for the next six months remained at 45. The index tracking traffic of prospective buyers remained at 25. Thirty-five percent of builders reduced prices in June, up from 32 percent in May. The use of sales incentives increased to 62 percent in June, its 15th straight month of being at least 60 percent. NAHB Chair Bill Owens predicted builder sentiment will remain weak until the nation’s housing shortage and home building conditions improve. “Costly and inefficient regulatory policy is clearly impeding the ability of builders to increase the housing supply,” said NAHB Chief Economist Robert Dietz. “According to a new NAHB study, government regulation, taxes, fees and other costs add more than 26 percent to the price of an average single-family home. “Easing permitting bottlenecks, density limits and inefficient zoning rules would help reduce costs and support the housing growth the nation needs.” New residential construction was weak this month, according to the U.S. Census Bureau and U.S. Department of Housing and Urban Development. Privately-owned housing units authorized by building permits fell 0.7 percent to 1.41 million from 1.42 million in April. Single-family authorizations increased 0.6 percent to 886,000 from 881,000 in April. Privately-owned housing starts fell 15.4 percent to 1.17 million from 1.39 million in April, 8.7 percent under its year-ago mark of 1.28 million. Single-family housing starts fell nearly 2 percent to 882,000 from 899,000.Privately-owned housing completions fell 8.1 percent to 1.31 million from 1.42 million in April, 14.2 percent under its year-ago mark of 1.53 million. Single-family housing completions fell 1.6 percent last month to 872,000 from 886,000 in April.