ConDig (19-Nov-18).  Confidence in the US homebuilder market took a tumble in November as rising interest rates and elevated home prices blunts consumer demand.

The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for newly-built single-family homes slid eight points to 60 in November, while the index measuring current sales conditions fell seven points to 67.

“For the past several years, shortages of labor and lots along with rising regulatory costs have led to a slow recovery in single-family construction,” said NAHB chief economist Robert Dietz. “While home price growth accommodated increasing construction costs during this period, rising mortgage interest rates in recent months coupled with the cumulative run-up in pricing has caused housing demand to stall.”

The component gauging expectations in the next six months dropped 10 points to 65 and the metric charting buyer traffic registered an eight-point drop to 45.

The three-month moving averages for regional HMI scores, the Northeast rose two points to 58. The Midwest edged one point lower to 57, the South declined two points to 68 and the West dropped three points to 71.

Construction industry leaders continue to warn that rapidly rising materials costs and a deepening shortage of labor could delay some projects and make others financially unviable.

A rise in material costs has been exacerbated follow a decision by President Trump to slap a 25% tariff on imported steel and a 10% duty on foreign aluminum from Canada, Mexico and the European Union on May 31.

Latest figures from the US Bureau of Labor Statistics showed that US construction inputs continued to post gains in October and rose 0.5% from the month prior as surging petroleum costs offset a drop in metal and a lumber prices.