US housebuilder sentiment drops in June as lumber prices rise

Sentiment among US housebuilders deteriorated in June due to sharply higher lumber prices, according to data released on Monday.

The National Association of Home Builders/Wells Fargo housing market index slipped two points from May to 68, missing expectations for a reading of 78.

The index of current sales conditions fell one point to 75, while the component gauging expectations in the next six months and the metric charting buyer traffic also dropped one point to 76 and 50, respectively.

Regionally, on a three-month moving average, the index for builder sentiment in the Northeast was up two points to 57, while the gauges for the West and Midwest were unchanged at 76 and 65, respectively, and the index for the South slipped one point to 71.

NAHB Chairman Randy Noel said: "Builders are optimistic about housing market conditions as consumer demand continues to grow. However, builders are increasingly concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability. Record-high lumber prices have added nearly $9,000 to the price of a new single-family home since January 2017."

NAHB chief economist Robert Dietz said: "Improved economic growth, continued job creation and solid housing demand should spur additional single-family construction in the months ahead. However, builders 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.”