Product Availability, Cost Hikes Dimming Outlook for Housing
WASHINGTON, DC — Builder confidence held stable in May, despite growing concerns over the rising price and availability of most building materials, particularly lumber, the National Association of Home Builders said.
According to the NAHB/Wells Fargo Housing Market Index (HMI), released last month, builder confidence in the market for newly built single-family homes “remains strong due to a lack of resale inventory, low mortgage interest rates and a growing demographic of prospective home buyers,” said NAHB Chairman Chuck Fowke.
“However, first-time and first-generation home buyers are particularly at risk for losing a purchase due to cost hikes associated with increasingly scarce material availability,” Fowke said. “Policymakers must take note and find ways to increase production of domestic building materials, including lumber and steel, and suspend tariffs on imports of construction materials.”
According to Robert Dietz, chief economist for the Washington, DC-based NAHB, aggregate residential construction material costs were up 12% year-over-year, with costs expected to rise even further.
“Some builders are slowing sales to manage their own supply chains, which means growing affordability challenges for a market in critical need of more inventory,” Dietz said. “With labor and lot availability a challenge in many markets, home buyers should expect rising prices throughout 2021 as the cost of materials, land and labor continue to rise.”
Housing production fell in April, according to the NAHB, which reported that overall housing starts declined 9.5% for the month, to a seasonally adjusted annual rate of 1.57 million units. Single-family starts decreased 13.4%, to a 1.09 million seasonally adjusted annual rate. The multifamily sector rose 0.8%, to a 482,000 pace.