Building-material costs on the rise may dampen the new-home market
Rising demand from homebuyers eager to take advantage of record-low mortgage-interest rates, and supply problems because of the shutdown of manufacturing plants in recent years has caused the cost of building materials to rise.
Anirban Basu, chief economist of Associated Builders and Contractors, said he expects prices nationally to stabilize eventually, though the near-term effects of higher prices could dampen the recovery of the new-home market.
“I think it will slow the housing recovery, because new-home buyers are very price-conscious,” Basu said. “What builders might do is move their product to be more upscale; affluent buyers are more likely to spend 5 (percent) to 10 percent more to get what they want. Value-oriented buyers are more likely to purchase an existing home.”
Greg Hardwick, president of Hardwick General Contracting Inc. in Maitland, Fla., said a lack of skilled labor also will affect the new-home market in 2013.
“The thing that may get us next year is the labor. There is a huge theme throughout the industry that not enough masons, drywallers and framers are available to meet demands,” Hardwick said. “We've lost a lot of that labor and those resources. They've gone to different industries, and now the demand is going back up.”
MCT Information Services