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Home builder sentiment retreats amid rising costs

Posted by The Aramco Group on Mon, Jun 18, 2018 @ 14:06 PM

The National Association of Home Builders reported this week that the sentiment among the association fell two points to a reading of 68 in June. While readings above 50 constitute positive sentiment, this latest report shows a far fall from the 18-year high seen earlier this year.

NAHB cites recent spikes in material costs and concerns about new tariffs as the culprit behind the drop in sentiment.

"Builders are optimistic about housing market conditions as consumer demand continues to grow," said NAHB Chairman Randy Noel. "However, builders are increasingly concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability."

The shortage of properties on the market is putting pressure on builders to bring new homes on-line as quickly as possible. However, builders passing along higher construction costs onto consumers may result in an even costlier housing prices.

Meanwhile, conforming no-point 30-year fixed mortgage rates are averaging 4.5 percent, 15-year rates are near 4.0 percent and the 5-year ARM is averaging 4.0 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.