The National Association of Home Builders in partnership with Wells Fargo released recently its July Housing Market Index, and the results of its survey (in which builders rate certain market conditions) while promising compared to sentiments from the previous year, do reflect a slight dip in confidence that the index’s authors attribute directly to rising materials costs.
“Builders continue to grapple with elevated building material prices and supply shortages, particularly the price of oriented strand board, which has skyrocketed more than 500 percent above its January 2020 level,” said NAHB Chairman Chuck Fowke. “We are grateful that the White House heeded our urgent plea to hold a building materials meeting with interested stakeholders on July 16 to seek solutions to end production bottlenecks that have harmed housing affordability.”
Nationally, according to the HMI, overall confidence in the housing market remains strong among builders, with the latest Index reporting an 80 (out of 100), which is eight points above where confidence was exactly one year ago. Looking at market particulars, builders don’t seem to doubt their ability to sell single-family homes now nor over the coming six months. However, they do seem to have specific concerns over the “traffic of prospective buyers,” which registered as a 65 on the index.
“Builders are contending with shortages of building materials, buildable lots and skilled labor as well as a challenging regulatory environment,” said NAHB Chief Economist Robert Dietz. “This is putting upward pressure on home prices and sidelining many prospective home buyers even as demand remains strong in a low-inventory environment.”
Regionally, confidence is strongest in the South and West regions and weaker in the Northeast and Midwest regions—a similar dynamic to the numbers recorded in July 2020.
Where Prices Are Rising
Since 2019, prices across a broad spectrum of materials have been growing, influenced by everything from tariffs to shipping delays, to the myriad problems stemming from the global pandemic. But as NAHB’s Fowke mentioned in his statement accompanying the July 2021 HMI’s release, some price increases, like that of OSB, have been more prominent than others.
With that in mind, here are some areas where price increases are most prounounced.