U.S. builder confidence in the single-family home market declined again in January from November’s all-time high, reflecting concerns over the COVID-19 pandemic and material costs.

The NAHB/Wells Fargo Housing Market Index fell 3 points this month to 83 after slipping 4 points to 86 in December. Two months ago, the index hit a record high of 90 as housing continued to be a bright spot for the economy amid a lack of available homes and historically low mortgage rates.

“Despite robust housing demand and low mortgage rates, buyers are facing a dearth of new homes on the market, which is exacerbating affordability problems,” NAHB Chairman Chuck Fowke said in a news release.

“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,” he added.

As The Washington Post reports, the residential real estate market was “a bright spot in an otherwise dreary 2020. After an initial decline in builder confidence and construction activity in March and April due to the pandemic, “the outlook for building improved considerably,” the Post said.

The NAHB Index hit all-time highs for three straight months, culminating in the November record. Any reading above 50 is considered positive.

“Demand for housing is being driven by cheaper mortgages and an exodus from city centers to suburbs and other low-density areas as companies allow employees to work from home and schools shift to online classes because of the coronavirus pandemic,” according to Reuters.

But NAHB Chief Economist Robert Dietz said limited inventory is “constraining more robust growth,” 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.”

Of the index’s three components, current sales conditions dropped 2 points in January to 90, sales expectations in the next six months fell 2 points to 83, and buyer traffic fell 5 points to 68.

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