Why New Homes Are About to Get Pricier

Why New Homes Are About to Get Pricier
Article by Daily Real Estate News | March 1, 2017

newhomeblueprintsWith the cost of building materials jumping 25 percent year over year, according to the National Association of Home Builders’ NAHB/Wells Fargo Housing Market Index, builders are increasingly concerned about how this will affect home buyers in the new-construction market. In 2016, builders ranked the cost of building materials low on their list of concerns—but now it’s one of their top five.

The increased cost of lumber is a chief catalyst. “Negotiations on a new softwood lumber agreement between the United States and Canada ground to a halt at the end of 2016 and likely are stalled pending the results of an investigation into unfair import practices requested by the U.S. Lumber Coalition,” the NAHB reports.

Because of this, home buyers likely will face price hikes. According to the NAHB/Wells Fargo Housing Market Index, builders cited the following as the 10 most significant problems they expect to face in 2017:

  1. Cost/availability of labor: 82%
  2. Cost/availability of developed lots: 67%
  3. Impact/hook-up/inspection or other fees: 61%
  4. Building material prices: 60%
  5. Federal environmental regulations and policies: 52%
  6. Local/state environmental regulations and policies: 52%
  7. Regulation of banking/financial institutions: 48%
  8. Development standards (parking, setbacks, etc.): 47%
  9. Inaccurate appraisals: 46%
  10. Health insurance: 40%

Source: “Material Costs Spike as a Menacing Builder Worry,” BUILDER (Feb. 28, 2017); REALTOR® Magazine Online, Daily Real Estate News 030117

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Big Milestone in Homebuilder Confidence

BIG MILESTONE IN HOMEBUILDER CONFIDENCE
Article by: Daily Real Estate News | Tuesday, June 18, 2013

Homebuilder confidence is at its highest level in seven years, reaching a big milestone in June, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The index, which measures homebuilder sentiment over the new-home market, rose eight points in June to 52 — any reading above 50 indicates that more builders view sales conditions as good rather than poor.

“This is the first time the HMI has been above 50 since April 2006, and surpassing this important benchmark reflects the fact that builders are seeing better market conditions as demand for new homes increases,” says NAHB Chairman Rick Judson. “With the low inventory of existing homes, an increasing number of buyers are gravitating toward new homes.”

The index measures builders’ perceptions of single-family home sales, buyer traffic, and sales expectations for the next six months. The index measuring just builders’ expectations for future sales surged nine points in June to 61, reaching its highest level since March 2006.

“Builders are experiencing some relief in the headwinds that are holding back a more robust recovery,” says NAHB Chief Economist David Crowe.

NAHB is predicting a 29 percent increase in housing starts this year, which would put housing starts at the 1 million mark for the first time since 2007.

Source: Daily Real Estate News (061813); National Association of Home Builders | Blog, In The News, distribution provided by Kenneth Bargers and Bargers Solutions, member of Pilkerton Realtors, residential real estate services located in Nashville, Tennessee

Builders Feel the Most Upbeat in More Than 4 Years

Article provided by: National Association of Home Builders, Daily Real Estate News (January 19, 2012)——————

BUILDERS FEEL THE MOST UPBEAT IN MORE THAN 4 YEARS

Builder confidence is at its highest level since June 2007, yet another sign that things are finally perking up in the new-home market, which has faced some of its darkest days on record this past year.

For the fourth consecutive month, builder sentiment for newly built, single-family homes was on the rise, according to the National Association of Home Builders and Wells Fargo Housing Market Index. The index measures builder sentiment on current and future sales conditions and buyer traffic.

The latest increase in the January index is “universally represented across every index component and region,” said Bob Nielsen, NAHB chairman.

“This good news comes on the heels of several months of gains in single-family housing starts and sales, and is yet another indication of the gradual but steady improvement that is beginning to take hold in an increasing number of housing markets nationwide,” Nielsen said.

Coming Off a Dismal 2011

The Commerce Department reported Thursday that for the third straight month, single-family home construction rose 4.5 percent in December. However, overall housing starts for the month dropped 4.1 percent, with gains in the single-family sector offset by a nearly 28 percent drop in apartment construction in December.

The latest news wraps up a dismal year for new-home building, with 2011 marking the fewest number of single-family homes built in half-century. In all, builders started about 606,900 homes in 2011 — that’s half the 1.2 million economists consider healthy for the sector.

Nevertheless, despite the mostly sluggish year for the sector, building did start to pick up in the last part of 2011 and housing analysts are upbeat that will continue. “We expect further sustained gains in starts and permits over the next few months; a real recovery is getting started,” Ian Shepherdson, chief U.S. economist at High Frequency Economics, told the Associated Press.

Threats to Recovery Remain

NAHB Chief Economist David Crowe warns that “caution remains the word of the day as many builders continue to voice concerns about potential clients being unable to qualify for an affordable mortgage, appraisals coming through below construction cost, and the continuing flow of foreclosed properties hitting the market.”

Source: National Association of Home Builders and “December Ends Worst Year for Single-Family Home Construction,” Associated Press (Jan. 19, 2012) | Blog distribution provided by Kenneth Bargers and Bargers Solutions, a proud member of Pilkerton Realtors, residential real estate services in Nashville, Tennessee

Builder Confidence Rises

Home builder confidence rose in October for the first time since May. 

The National Association of Home Builders/Wells Fargo Housing Market Index rose three points to 16. All three components of the index were up with sales conditions rising three points to 16; six-month sales expectations increasing four points to 23; and buyer traffic climbing two points to 11. 

“The new-homes market is finally moving past the lull that occurred when the home buyer tax credits expired and economic growth stalled this summer,” David Crowe, NAHB chief economist, said in a statement. “While challenges such as competition from foreclosures, inaccurate appraisal values, and general consumer uncertainty about the economy and job market continue to be major factors, builders have seen a slight increase in consumers who are considering a home purchase.” 

Source: DailyFinance, Joseph Lazzaro (10/18/2010)