WASHINGTON (Reuters) – US homebuilders’ confidence in the single-family home market unexpectedly declined in January, held back by rising COVID-19 infections and more expensive timber, although the housing market remains underpinned by record low mortgage rates .
The NAHB / Wells Fargo Housing Market Index slipped to a reading of 83 this month from 86. Economists interviewed by Reuters had expected the index to remain unchanged at 86. A reading above 50 means that more manufacturers view market conditions as favorable than poor. The index hit an all-time high of 90 in November.
“Despite robust housing demand and low mortgage rates, buyers are facing a shortage of new homes on the market, which is exacerbating accessibility problems,” said Chuck Fowke, president of the NAHB. “Manufacturers are struggling with supply side constraints related to costs of lumber and other materials, lack of affordable lots and shortages of labor that delay delivery times and put upward pressure on house prices. “
Housing demand is driven by cheaper mortgages and an exodus from from urban centers to suburbs and other low-density areas as companies allow employees to work from homes and schools switch to online classes due to the coronavirus pandemic. About 23.7% of the workforce works from home.
The coronavirus recession, which began in February, has disproportionately affected lower-wage workers. A resurgence of COVID-19 cases is also disrupting construction work sites. According to the data, the 30-year fixed mortgage rate averages around 2.79% from mortgage financing agency Freddie Mac.
The survey’s sell expectations measure over the next six months dropped two points to a reading of 83 this month, while an indicator of current selling conditions dropped two points to 90. The Potential Buyers Index fell by two points five points to 68.
Reporting by Lucia Mutikani