The index decreased by one point to 83 in January, the first marked decrease in four months, according to the National Association of Homebuilders.

Builder confidence kicked off 2022 with the first decline in four months as rising inflation and supply chain disruptions continue to complicate homebuilders’ jobs, according to the National Association of Homebuilders (NAHB) and the Wells Fargo Housing Market Index (HMI).

The index decreased by one point to 83 in January after hovering around 83 and 84 for the past three months despite demand for homes remaining as high as ever, the latest NAHB report released on Tuesday shows.

“Higher material costs and lack of availability are adding weeks to typical single-family construction times,” said NAHB Chairman Chuck Fowke, a Tampa, Florida-based custom home builder.

The combined impact of wildfires in the west and the Biden administration doubling tariffs on Canadian softwood lumber have caused the price of lumber to jump roughly 85 percent in the past three months, according to the Lumber industry trade journal Random Lengths. As inflation rates rise, the cost of construction materials in general has shot up 19 percent since Dec. 2021, according to the NAHB.

“Policymakers need to take action to fix supply chains,” Fowke said. “Obtaining a new softwood lumber agreement with Canada and reducing tariffs is an excellent place to start.”

The index, conducted by the NAHB via a survey of builders gauging their interpretations of current single-family home sales, home sales for the next six months, and traffic of prospective buyers found that sentiment for current sales remained high at 90, while sales expectations for the next six months fell two points to 83. The measure of perspective buyers also fell two points to 69.

The data was collected during the first two weeks and does not account for the most recent jump in mortgage rates, according to the NAHB.

The association predicted the ongoing supply chain issues would have a lasting impact on affordability throughout 2022.

“While lean existing home inventory and solid buyer demand are supporting the need for new construction, the combination of ongoing increases for building materials, worsening skilled labor shortages and higher mortgage rates point to declines for housing affordability in 2022,” said NAHB Chief Economist Robert Dietz.

Regionally, the Northeast saw the only measurable decline, with sentiment falling one point to 73. Meanwhile, the Midwest increased one point to 75, while the South and West both saw a one point rise to 88.

Email Ben Verde

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×