Page 18 - BB_July_2018

BUILDERS SAY

LUMBER

PRICES ARE

HURTING

AFFORDABILITY

In a recent NAHB survey, over 40 percent of builders question on NAHB’s April HMI survey asked single-
said construction costs in general are causing family builders if this increase was having an adverse
home buyers to hold back from purchasing a new
home, and over 90 percent said that lumber prices
specifically are hurting affordability. The results are
consistent with yesterday’s post, which described a
surge in the number of builders reporting a shortage
of framing lumber.
The new results reported in this post come from
special questions on the April 2018 survey for the
NAHB/Wells Fargo Housing Market Index (HMI). One
of these questions asked single-family builders in
the HMI panel why their prospective customers are
holding back from buying a new home—if, in fact,
that is what they are doing. A substantial share (21
percent) said that the question didn’t apply, because
their buyers are not holding back at the moment.
But the top answer, checked by 43 percent of the impact on the affordability of the homes they build.
builders, was that buyers are holding back right In response, 95 percent of the builders said “yes,”
now because they are unwilling to cover current the recent increase in lumber prices was hurting the
construction costs. The second most common affordability of their new homes. The 95 percent
reason for holding back (checked by 32 percent of were evenly split on whether the adverse impact on
the builders) was that existing home prices are more affordability was significant, or only minor.
competitive. At the other end of the spectrum, only 7 NAHB JUNE 2018
percent of builders cited student debt as a reason for
buyers holding back, despite the attention the topic
has received recently (for example, in a 2017 report
issued by American Student Assistance® and the
National Association of REALTORS®).
The top two reasons for buyers holding back
as of April 2018 are related, of course, as rising
construction costs are a key reason existing home
prices are currently more competitive.
A key reason for rising construction costs, in turn,
is the increase in lumber prices the home building
industry has witnessed over the past year and a half
(along with the ongoing shortage of labor in vital
construction trades, and the effect of government
regulation in the price of a new home). Another

18 JULY 2018 | GREATER SAN ANTONIO BUILDERS ASSOCIATION