Homebuilders drop confidence as inflation soared material prices

Posted on January 24, 2022 |

Builder confidence dropped 1 point to 83 in January, anything above 50 is considered to be good but it is the first drop in four months.
The cost of residential building materials increased by 19% since December 2020 and the price of softwood lumber rose by 85% in the past 3 months in the previous year, but due to double tariffs by the US on Canadian lumber and western wildfires, increased prices again, which disrupted timber production in the third quarter of 2021.
Builders are encountering higher mortgage rates in the new year in which the average rate on the 30-year fixed is now more than 50 basis points higher than it was a month ago and 83 basis points higher than it was one year ago.
Prices of other materials, such as gypsum and steel, are also up and the continuing labor shortage has driven the costs up as well.

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