Small and midsize builders are becoming more frustrated with the increasing costs of labor and materials along with a shortage of building lots and credit, according to the National Association of Home Builders.
“Many builders are expressing frustration over being unable to respond to the rising demand for new homes due to difficulties in obtaining construction credit, overly restrictive mortgage lending rules and construction costs that are increasing at a faster pace than appraised values,” said NAHB chairman Rick Judson, a homebuilder from Charlotte, N.C.
The builders released their monthly survey Monday and it shows confidence slipped for the third straight month.
The NAHB/Wells Fargo Housing Market Index fell two notches from March to 42 in April. (Any reading over 50 indicates more builders view conditions as good than poor.)
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“Builders’ outlook for the next six months has improved due to the low inventory of for-sale homes, rock-bottom mortgage rates and rising consumer confidence,” NAHB chief economist David Crowe said.
However, the unevenness of the housing recovery is “holding back new building and job creation,” Judson said. One of builders’ complaints is an ongoing shortage of framing crews.
Economists at JPMorgan point out in a research note that higher labor costs are not evident from the economic data. Average hourly earnings for construction workers have been increasing somewhat more slowly than overall wages, the Chase economists said in an April 12 report. Except for lumber, most building materials have been increasing “at a fairly tame 2.5% over the past year.”
