31 May Builders Work Harder to Meet Growing Demand
Builders increased home construction in the month of April, despite industry challenges.
INDIANAPOLIS, Ind. –Last month, the United States Census Bureau reported a 52% increase in single-family building permits from February 2018 to March 2018. Continuing in the trend, data shows a 7% increase in permits from March of this year to April when 1,640 permits were pulled. This number indicates a 25% growth from April of last year, when 1,308 permits were pulled.
“The growing demand for homeownership has undoubtedly encouraged builders to escalate production.” said Indiana Builders Association President Pat Richard. “However, while consumers urge the industry for more, record-high lumber cost have hurt builders’ bottom lines, making it more difficult to produce housing at every price point, especially troublesome for the first-time home buyer.”
In fact, the Chief Economist for the National Association of Home Builders (NAHB) Robert Dietz considers the rising cost of lumber to be the most serious headwind facing the housing market today. Home builders have seen a 59% increase in framing lumber prices as compared to the start of 2017. Since the beginning of last year, rising lumber prices have added more than $7,000 to the price of a typical new home and more than $2,000 to the price of a typical apartment. A number of reasons contribute to the jump in price including a rail car shortage in Canada and a 21% effective tariff rate placed on Canadian Softwood Lumber.
These supply-side increases pose a real problem for builders trying to stay within budget, while still creating a housing market that is diverse in both size and pricing,” said Indiana Builders Association Chief Executive Officer Rick Wajda. “Given Indiana’s tight housing inventory, coupled with the increase in employment and demographic tailwinds, we should continue to see a boost in demand for newly built single-family homes.”