Shares of U.S. homebuilders are all trading lower after a key metric for the group missed expectations.

home BUILDER SENTIMENT: Builder confidence for newly-built single-family homes dropped to its lowest level since before the Trump election. The confidence metric slipped two points in July to 64. The HMI measure of current sales conditions has been at 70 or higher for eight straight months, indicating strong demand for new homes,” said NAHB Chief Economist Robert Dietz. “However, builders will need to manage some increasing supply-side costs to keep home prices competitive.” “Home builders are troubled due to the increasing costs of material, in particular lumber,” said NAHB Chairman Granger MacDonald. The situation is impacting housing affordability even as consumer interest purchasing a new home is strong.

CANADIAN LUMBER TARRIFFS: In June, commerce secretary Wilbur Ross proposed new lumber tariffs adding to the previous tariffs proposed by the Trump administration on Canadian softwood lumber imported into the U.S. That type of lumber is used to build U.S. homes. Back in June, NAHB Chair MacDonald said adding the new tariffs “to the proposed 20% countervailing lumber duty that the Trump administration slapped on imports of lumber this spring means that total tariffs would be a whopping 27%.” Publicly traded companies in the space include Beazer Homes (BZH), D.R. Horton (DHI), Hovnanian (HOV), KB Home (KBH), Lennar (LEN), PulteGroup (PHM), and Toll Brothers (TOL). Shares of construction materials vendors are also lower, including Vulcan (VMC), Martin Marietta Materials (MLM), Eagle Materials (EXP), US Concrete Inc (USCR), and Beacon Roofing Supply (BECN).