Homebuilders are experiencing worsening supply chain problems, which is impacting confidence.

Builder confidence in the single-family, newly built housing market fell 1 point in February to 82 on the National Association of Home Builders/Wells Fargo Housing Market Index. This is the second consecutive month of decreases. Anything over 50 is considered to be positive. It was at 84 on February 20, 2021.

NAHB chairman Jerry Konter (a Savannah-based builder) stated that “Production interruptions are so severe” and explained that builders have been waiting for months to get cabinets, garage doors countertops, appliances, and counter tops. These delivery delays raise construction costs and price prospective buyers out the market, according to NAHB Chairman Jerry Konter.

Surging lumber pricesThese are adding thousands to the price of new houses.

Rising interest rates are already a problem for homebuyers. Just 4% is the average 30-year fixed-rate mortgage rate. This is a significant increase from last year. Some buyers cannot afford higher rates when they are faced with higher prices for their homes. This is what is driving the current high rental demand.

Robert Dietz (chief economist at NAHB) stated that residential construction costs rose 21% year-over-year and this has made it particularly difficult for first-time buyers. Higher interest rates for 2022 will reduce affordability of housing, even though demand is strong due to low resale inventory.

Out of the three component components, the current sales situation increased by 1 point to 90. Sales expectations for the next 6 months decreased 2 points to 80. Buyer traffic declined 4 points, to 65.

On a 3-month moving average basis, Northeast sentiment increased by 3 points to 75. The West saw a 1 point increase to 89 while the Midwest saw a 1 point decrease to 73. South Sentiment fell 1 point to 85.