Real Estate News

Inflation forces homebuilders to take it slow, raise prices - Rising costs and shortages of building materials and labor are rippling across the homebuilding industry, which accounted for nearly 12% of all U.S. home sales in July. Construction delays are common, prompting many builders to pump the brakes on the number of new homes they put up for sale. As building a new home gets more expensive, some of those costs are passed along to buyers.

Lumber futures jumped to an all-time high $1,670 per thousand board feet in May. They've since dropped to $634, about 10% higher than a year ago. (Have builders passed this lower cost onto buyers after raising their prices to compensate for the earlier limber price increases?)

But wholesale prices for a category of homebuilding components that includes windows, roofing tiles, doors and steel, increased 22% over the last 12 months. (Question:  How much of that increase in price is reflected in the home price and will some be absorbed by builders, or all passed along to home buyers so GPM can be retained?)

A chronic shortage of skilled construction workers has worsened during the pandemic, forcing builders to factor in higher labor costs. (Paying people not to work is one reason, then shortages of crews and sporadic building material deliveries require sudden needs to hire more temporary crews at higher costs to get homes completed.)