Rising Construction Costs Holding Down Builder Confidence

Rising construction costs tied in part to tariffs are holding down builder confidence which, though slipping 1 point in August, is still very solid at 67. Still this is the lowest reading since September last year.

Both current and future sales slipped 1 point, to 73 and 72 respectively, with buyer traffic down 2 points and for the first time since October last year is back under 50 at 49. Weakness here points to lack of first-time buyers which has been a negative for housing throughout the ongoing expansion.

And builders are increasingly concerned about affordability which reflects a lack of skilled construction labor, buildable lots and rising lumber costs with the latter reflecting what the report says are tariffs and the threat of a trade war. Watch tomorrow for housing starts and permits.