Home builders’ confidence in the U.S. housing market edged lower in August as builders reported strong demand but also expressed concerns that rising prices loom as a potential threat to sales.
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Builder confidence edged down to 67 in August on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), from July’s 68 but in line with economists’ expectations. It is the lowest reading for the HMI since September 2017 when the reading came in at 64. It is, however, still a solid reading with any measure above 50 indicating expansion.
Builders continued to report strong demand this month for new housing thanks to a strong economy, but there are concerns that rising construction costs, a lack of buildable lots and the skilled labor shortage will continue to reduce affordability.
In addition, builders are continuing to monitor how tariffs are affecting the price of key building materials.
As previously reported by FOX Business, housing market experts are starting to warn of a potential housing market peak. In a conference call discussing the company’s latest earnings, Redfin’s chief executive said that the company is forecasting slower revenue growth for the third quarter due in part to a “weakening real estate market.”
“As U.S. home prices have increased faster than wages for 70 straight months, buyers in markets like these have finally had enough, at least for now. There are still plenty of markets where homebuyer demand is strong. But for the first time in years, we are getting reports from managers of some markets that homebuyer demand is waning, especially in some of Redfin's largest markets,” according to Glenn Kelman, CEO of the real estate brokerage.
David Rosenberg, chief economist and strategist at Gluskin Sheff + Associates, took an even more negative view: In a tweet said that the housing market has entered a recession of its own and “nobody seems to notice.”
The HMI index, which measures current sales conditions, declined by one point to 73 while a measure on expectations in the next six months also fell a single point to 72.