Partly reflecting growing affordability concerns, the National Association of Home Builders released a report on Wednesday showing a modest deterioration in U.S. homebuilder confidence in the month of August.
The report said the NAHB/Wells Fargo Housing Market Index edged down to 67 in August from 68 in June, matching economist estimates.
“The good news is that builders continue to report strong demand for new housing, fueled by steady job and income growth along with rising household formations,” said NAHB chairman Randy Noel.
He added, “However, they are increasingly focused on growing affordability concerns, stemming from rising construction costs, shortages of skilled labor and a dearth of buildable lots.”
The slight drop by the housing market index reflected modest decreases by all three of the components of the index.
The metric charting buyer traffic dropped two points to 49, while the index measuring current sales conditions and the component gauging expectations in the next six months both slipped by one point to 73 and 72, respectively.
“Builders continue to monitor how tariffs and the growing threat of a trade war are affecting key building material prices, including lumber,” said NAHB chief economist Robert Dietz.
He added, “These cost increases, coupled with rising interest rates, are putting upward pressure on home prices and contributing to growing affordability challenges.”
On Thursday, the Commerce Department is scheduled to release a separate report on new residential construction in the month of July.
Housing starts are expected to climb to an annual rate of 1.260 million in July after tumbling to a rate of 1.173 million in June.