Tariffs Curtailing Builder Confidence in June

The June reading of builder sentiment from the National Association of Home Builders/Wells Fargo Housing Market Index stands at 68 points, still positive, yet down two points from May.

The last drop in points this year was in April, after a rise in mortgage rates. Experts cite the rising cost of building materials for this months decrease. Canadian lumber tariffs were effective starting last year, and prices have increased more than 67 percent year-over-year, breaking records in May but easing slightly in June, CNBC reports. "Builders are optimistic about housing market conditions as consumer demand continues to grow," said NAHB chairman and Louisiana-based custom home builder Randy Noel. "However, builders are increasingly concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability. Record-high lumber prices have added nearly $9,000 to the price of a new single-family home since January 2017."

"Improved economic growth, continued job creation and solid housing demand should spur additional single-family construction in the months ahead," said NAHB chief economist Robert Dietz. "However, builders do need access to lumber and other construction materials at reasonable costs in order to provide homes at competitive price points, particularly for the entry-level market where inventory is most needed." Regionally, on a three-month moving average, builder sentiment in the Northeast rose 2 points to 57, while the West and Midwest remained unchanged at 76 and 65, respectively. Sentiment in the South fell 1 point to 71.

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