Home Building Market Experiencing Rising Costs,Lumber Prices coming down
May 17, 2021
The home building market continues to experience pains as rising costs continue to plague the market. Despite rising costs, the NAHB Housing Market Index remained at 83 this month and near record highs for newly built single-family homes. Any number over 50 indicates that more builders view conditions as good than poor. The component measuring traffic of prospective buyers fell one point to 73. “Low interest rates are supporting housing affordability in a market where the cost of most materials is rising,” said NAHB Chief Economist Robert Dietz. “In recent months, aggregate residential construction material costs were up 12 percent year-over-year, and our surveys suggest those costs are rising further.
Lumber prices are retreating from record highs which is a positive sign for home builders who have been dealing with soaring prices over the past year. Prices have fallen to near $1,300 from the record high $1,700 seen in the past two weeks as production continues to ramp up and as commodity traders book some profits. “Rising materials prices are significantly driving up prices for single-family homes and apartments,” wrote NAHB Chief Economist Robert Dietz. “Combined with expectations of rising interest rates, these higher prices place additional pressure on housing affordability, which continued to decline in the first quarter.”