Homebuilder confidence in the U.S. unexpectedly slumped to its lowest level in a year in the month of August, according to a report released by the National Association of Home Builders on Tuesday.
The report showed the NAHB/Wells Fargo Housing Market Index tumbled to 75 in August from 80 in July, while economists had expected the index to come in unchanged.
With the unexpected decrease, the housing market index dropped to its lowest level since hitting 72 in July of 2020.
“While the demographics and interest for home buying remain solid, higher costs and material access issues have resulted in lower levels of home building and even put a hold on some new home sales,” said NAHB Chief Economist Robert Dietz.
He added, “While these supply-side limitations are holding back the market, our expectation is that production bottlenecks should ease over the coming months and the market should return to more normal conditions.”
The unexpected drop by the headline index came as the index gauging current sales conditions and the measuring traffic of prospective buyers both fell by 5 points to 81 and 60, respectively.
Meanwhile, the NAHB said the gauge charting sales expectations in the next six months held steady at 81.
The Commerce Department is scheduled to release a separate report on new residential construction in the month of July on Wednesday.
Housing starts are expected to tumble by 2.5 percent to an annual rate of 1.602 million, while building permits are expected to climb by 0.8 percent to a rate of 1.610 million.