Growing pains’ for home builders.
The housing market’s comeback has hit a speed bump — an index of home builders’ confidence slipped again in March.
The index, which is compiled by the National Association of Home Builders and Wells Fargo, is on a three-month slide after eight months of gains. It’s based on home builders’ perception of current sales for new single-family homes and their expectations for future sales.
Demand isn’t the problem; supply is. There are bottlenecks in the supply chain for developed lots, along with rising costs for building materials and labour
“Home building is beginning to suffer growth pains as the infrastructure that supports it tries to re-establish itself,” said NAHB Chief Economist David Crowe. “During the Great Recession, the industry lost home-building firms, building material production capacity, workers who retreated to other sectors and the pipeline of developed lots.”
Other issues facing home builders include appraisals that are coming in too low and mortgages that are too hard to get for prospective buyers. Despite all of these issues, “builders are much more optimistic today than they were at this time last year,” Crowe said.
In fact, home builders grew more optimistic about future home sales in March; a decline in current sales conditions was responsible for the index’s 2-point drop to 44.
Plus, some regions are doing better than others. The index jumped 4 points in the West, to 58. That’s well ahead of the Midwest’s 47, the South’s 46 and the Northeast’s 39.