Builder Confidence in U.S. Drops

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Builder confidence in the market for newly built, single-family homes in the U.S. declined for the second month, after a long period of improvement, according to data released today by the National Association of Home Builders.

The confidence index dropped two points in March, the group reported. Before leveling off in January, builder confidence experienced eight consecutive positive months.

"Although many of our members are reporting increased demand for new homes in their markets, their enthusiasm is being tempered by frustrating bottlenecks in the supply chain for developed lots along with rising costs for building materials and labor," NAHB Chairman Rick Judson, a home builder from Charlotte, N.C., said in a statement. "At the same time, problems with appraisals and credit availability remain considerable obstacles to completing deals."

The survey gauges builder expectation of current single-family home sales and sales over the next six months. While current sales conditions experienced a drop, expectations for sales in the next six months rose one point to 51.

From NAHB Chief Economist David Crowe:

"In addition to tight credit and below-price appraisals, home building is beginning to suffer growth pains as the infrastructure that supports it tries to re-establish itself. During the Great Recession, the industry lost home building firms, building material production capacity, workers who retreated to other sectors and the pipeline of developed lots. The road to a housing recovery will be a bumpy one until these issues are addressed, but in the meantime, builders are much more optimistic today than they were at this time last year."