Homebuilder Confidence Drops to 13-Month Low on High Material Costs and Surging Home Prices

A carpenter works on building new townhomes in Tampa, Fla., on May 5, 2021. Octavio Jones/REUTERS

Homebuilder confidence fell in August to its lowest reading in 13 months, driven down by higher construction costs, supply shortages, and rising home prices sidelining prospective buyers, according to the NAHB/Wells Fargo Housing Market Index (HMI).

Sentiment among single-family homebuilders fell by five points to a reading of 75 in August, according to the HMI measure. In July 2020, builder sentiment stood at 72, after plunging to 30 in April of that year, when pandemic lockdowns sent the economy into a tailspin.