Homebuilding rises as lumber prices fall; supply chain shaky

"Homebuilders in the single-family construction market are feeling better, as lumber prices are way down from sky-high levels and buyer demand is growing," Diana Olick reports for CNBC: "Builder sentiment rose 1 point in September to 76, according to the National Association of Home Builders/Wells Fargo Housing Market Index. It was the first increase in three months. Sentiment stood at 83 in September of last year and then set a record high of 90 last November. It then dropped off dramatically when lumber prices spiked and supply-chain issues hampered construction."

Olick also notes, "Lumber reached more than $1,600 per thousand board feet this spring, but the more recent price has been around $400."

NAHB Chairman Chuck Fowke said the construction industry still faces difficulties. He told Olick that, though the cost of softwood lumber and some other building materials has gone down, "delivery times remain extended and the chronic construction labor shortage is expected to persist as the overall labor market recovers."

"The biggest hurdle for builders in the coming months will be affordability, as they are forced to raise prices in order to keep up with construction costs," Olick reports. "Buyers are still getting help from low mortgage rates, but should rates begin to rise, the squeeze on their wallets will intensify."