U.S. NAHB housing market index drops further in June, but remains in positive territory

The U.S. NAHB housing market index dropped further in June; however, it continues to be in elevated territory as home builders continue to have several incentives to construct new homes. The homebuilder optimism dropped two points for the second consecutive month, as gauged by the NAHB housing market index. The index fell to its lowest level since November 2016.

The survey participants stated that increasing lumber prices have become a rising worry as higher costs have further impacted home affordability. Prices of lumber rose around 17 percent from the recent cycle low registered at the end of June.

Region wise, optimism came in mixed as gains in the Northeast and West were more than countered by huge declines in the Midwest and South. Mirroring the headline index, all the three components – current sales, future sales and prospective buyer traffic – dropped on the month but all continue to be strongly in positive territory. The HMI performance indicates towards some weakening in starts activity, though sound demand continues to be positive to the outlook, stated Wells Fargo in a research report.

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