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Lumber prices are rising amid the resurgence of COVID cases across much of the U.S. Builder confidence is down three points to 83 in January according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).

“Despite robust housing demand and low mortgage rates, buyers are facing a dearth of new homes on the market, which is exacerbating affordability problems,” said NAHB Chairman Chuck Fowke, a custom home builder from Tampa, Fla. “Builders are grappling with supply-side constraints related to lumber and other material costs, a lack of affordable lots, and labor shortages that delay delivery times and put upward pressure on home prices. They are also concerned about a changing regulatory environment.”

“While housing continues to help lead the economy forward, limited inventory is constraining more robust growth,” said NAHB Chief Economist Robert Dietz. “A shortage of buildable lots is making it difficult to meet strong demand and rising material prices are far outpacing increases in home prices, which in turn is harming housing affordability.”

The HMI index measuring current sales conditions decreased by two points to 90, while the index measuring sales expectations in the next six months fell two points to 83 and the index looking at the traffic of prospective buyers decreased five points to 68.

On a regional basis, the Northeast decreased six points to 76, the Midwest increased two points to 83, the South fell one point to 86 and the West decreased by one point to 95.