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Rising costs weigh on US homebuilder confidence

Published on NewsOK Modified: April 15, 2013 at 11:02 am •  Published: April 15, 2013

U.S. homebuilders are concerned that limited land and rising costs for building materials and labor will slow sales in the short term.

Still, their outlook for sales over the next six months climbed to the highest level in more than six years — suggesting the obstacles could be temporary.

The National Association of Home Builders/Wells Fargo builder sentiment index released Monday fell this month to 42 from 44 in March. It was the third decline since January. Measures of customer traffic and current sales conditions both declined from March's reading.

Readings below 50 suggest negative sentiment about the housing market. The last time the index was at 50 or higher was in April 2006.

The recent declines come after the index had been trending hiring since October 2011, when it was 17.

Steady job creation, near record-low mortgage rates and rising home values have spurred sales over most of the past year. New-home sales fell in February after climbing to the highest level in more than four years the previous month.

In response to the improving demand, builders have stepped up home construction. They broke ground on single-family homes at the highest annual rate in 4 ½ years in February.

Still, the sudden rise in home construction follows a severe and prolonged downturn. And the effects of the crisis are now crimping the recovery.

During the roughly six years since the housing bubble burst, some 1.4 million residential construction jobs vanished, while land development — when raw land is prepared for home construction — slowed sharply.

In addition, suppliers of building materials sharply reduced their stockpiles and have been slow in adjusting to the resurgent demand for lumber and other goods.

As a result, homebuilders are facing higher construction costs and heated competition for ready-to-build land. They're also paying more for labor, because many of the subcontractor firms that builders rely on are scrambling to find experienced workers, many of which have long since moved on to other types of jobs.

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