Home-builder confidence in the U.S. slipped in June mainly due to a sharp increase in lumber prices, and contractors are becoming more worried about the impact of tariffs imposed on imported construction materials, according to the National Association of Home Builders, or NAHB.
The NAHB/Wells Fargo Housing Market Index fell to a reading of 68 this month from 70 in May, with all sub-indexes edging down a single point. Despite the decline, home-builder sentiment remains on "solid footing," the NAHB said.
The sub-index gauging current sales conditions decreased to a reading of 75, and the component measuring expectations in the next six months declined to 76. The indicator charting buyer traffic dropped to 50.
"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."
Noel said lumber prices are at record-highs and have raised the cost of a new single-family home by $9,000 since January 2017.
"[B]uilders 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," said NAHB chief economist Robert Dietz.