Homebuilders are upbeat, despite supply chain troubles
Homebuilders are upbeat, despite supply chain troubles
Homebuilder confidence edged one point lower in July from the previous month, the National Association of Home Builders said Monday in its latest index. But that still leaves builder sentiment in the “very optimistic” range, higher than any time before the pandemic, going all the way back to the mid-1980s.
Yet there are lot of problems still besetting the home construction industry. Those include everything from supply chain bottlenecks and soaring materials prices to shortages of skilled labor and land for development.
Optimism has cooled off a bit since the fall when the economy started reopening and would-be buyers could come to kick the floorboards in model homes again.
“We’ve moved from an extremely hot housing market to a simply hot housing market,” said Robert Dietz, chief economist at the National Association of Home Builders.
Since the pandemic hit, a lot of work-from-home types have started looking for new digs, according to Chuck Fowke, a custom builder in Tampa, Florida, and chair of the builders association. Meanwhile, younger people want new homes for their growing families.
“Quite frankly, we haven’t built enough houses since 2010. And the demand is going to be strong for probably the next 10 to 15 years,” Fowke said.
But right now, meeting that demand means navigating delays and double-digit price increases, Dietz said.
“Literally the nuts and bolts that go into building a home, whether due to global supply chain disruptions or the run-up in prices in steel and copper, items that used to be guaranteed to arrive in weeks are now taking months — things like windows and doors, microwaves,” Dietz said.
All that is wreaking chaos with home prices, Fowke said.
“Right now, in many cases, our pricing is only good for maybe a week or two,” he said.
In the past year, the median price of a new home has gone from $317,000 to $374,000.
“It’s pricing a lot of local buyers — especially first-time homebuyers and minority homebuyers — out of the market,” said Vivek Sah, who studies real estate at the University of Nevada, Las Vegas.
According to the Fowke, every $1,000 increase in the price of a new home means 150,000 would-be buyers can’t afford one anymore.
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