A real estate site called Property Abroad points to, among other things, the rising cost of construction in explaining the unexpected drop in U.S. homebuilder confidence in April. Perhaps more telling, the confidence survey also indicates the drop this month is regarded as “temporary”.
Many themes thoroughly explored at the recent COFI Convention and NAWLA Regional Meeting in Vancouver are evident in the article:
- “The National Association of Home Builders (NAHB)/Wells Fargo index of builder confidence dropped to 42 from 44 in March, the lowest reading since October 2012 and the third monthly fall in a row. ‘Many builders are expressing frustration over being unable to respond to the rising demand for new homes due to difficulties in obtaining construction credit, overly restrictive mortgage lending rules and construction costs that are increasing at a faster pace than appraised values,’ according to Rick Judson, the group’s chairman.
- The report showed builders grew more concerned over sales and buyer traffic. That indicates that demand has cooled along with the rest of the economy. Nevertheless demand remains high compared with recent figures and residential construction companies were more optimistic about the future than at any time in the last six years.
- NAHB Chief Economist David Crowe said that ‘supply chains for building materials, developed lots and skilled workers will take some time to re-establish themselves following the recession, and in the meantime builders are feeling squeezed by higher costs and limited availability issues.’ Mr. Crowe went on to say, ‘builders’ outlook for the next six months has improved due to the low inventory of for sale homes, rock bottom mortgage rates and rising consumer confidence.’
- Jeffrey Mezger, Chief Executive Officer of KB Home, a countrywide developer, said that although ‘the pace of the housing market recovery is gaining momentum, it is important to keep in mind that we are still in the early stages of the recovery, and there’s a long way to go before the industry reaches normalized activity levels.’”