U.S. homebuilders are feeling less optimistic about their sales prospects, reflecting concerns that rebuilding efforts after hurricanes Harvey and Irma will drive up costs for construction labor and materials.
Even so, builders' overall view of the new-home market remains positive.
The National Association of Home Builders/Wells Fargo builder sentiment index released Monday slipped to 64 this month. That's down 3 points from a downwardly revised reading of 67 in August.
Readings above 50 indicate more builders view sales conditions as good rather than poor. The index has been above 60 since September last year.
"Despite this month's drop, builder confidence is still on very firm ground," Robert Dietz, chief economist for the National Association of Home Builders, said in a statement. "With ongoing job creation, economic growth and rising consumer confidence, we should see the housing market continue to recover at a gradual, steady pace throughout the rest of the year."
The latest index fell short of analyst predictions, which called for a reading of 67, according to FactSet.
Readings gauging builders' view of sales now and over the next six months declined from past month. A measure of traffic by prospective buyers also fell.
Sales of new U.S. homes are running ahead of last year's pace, reflecting strong demand for homes as the economy has continued to create jobs. Still, sales posted their biggest one-month drop in nearly a year in July, sliding 9.4 percent to a seasonally adjusted annual rate of 571,000. August new-home sales figures are scheduled for release next week.
Sales stumbled this summer as a supply crunch elevated average home prices nationwide. In response, builders are adding to the supply of new homes, providing a crucial outlet. But the number of newly built properties available is still below historical levels.
While home construction is up about 2.3 percent so far this year, builders say they are hamstrung by shortages of skilled workers and land parcels ready for new construction.
That dearth of skilled construction labor is expected to get worse in the wake of Hurricane Harvey, which plowed through Texas and Louisiana late last month, and Hurricane Irma, which slammed into Florida earlier this month. Rebuilding in the aftermath of the two storms is expected to drive construction costs higher and cause delays.
"The recent hurricanes have intensified our members' concerns about the availability of labor and the cost of building materials," said National Association of Home Builders Chairman Granger MacDonald, a homebuilder and developer from Kerrville, Texas. "Once the rebuilding process is underway, I expect builder confidence will return to the high levels we saw this spring."
This month's builder index was based on 328 respondents.
A measure of current sales conditions for single-family homes fell 4 points to 70, while an outlook for sales over the next six months slid 4 points to 73. Builders' view of traffic by prospective buyers edged down 1 point to 47.
Information for this article was contributed by Shobhana Chandra of Bloomberg News.
Business on 09/19/2017