Shortages of buildable lots and skilled labor, excessive regulations, rising mortgage interest rates and ongoing home price appreciation pushed housing affordability in the fourth quarter of 2016 to its lowest point since the third quarter of 2008, according to the NAHB/Wells Fargo Housing Opportunity Index. released this morning.
Housing starts returned to trend in January, dropping 2.6% to a seasonally adjusted annual rate of 1.246 million units, according to newly released data from HUD and the Census Bureau.
Although employment and home price levels have returned to or exceeded normal, home construction during the fourth quarter of 2016 remained tepid in many markets due to regulatory and supply-side constraints.
Builder confidence in the single-family 55+ housing market remained strong in the fourth quarter of 2016 with a reading of 67, up eight points from the previous quarter, according to the NAHB 55+ Housing Market Index, released today. This is the highest reading since the inception of the index in 2008.
Results from NAHB surveys of home buyers and home builders show that buyers have a strong preference for open floorplans, and that most builders are doing their best to create those open spaces for their clients. There are, however, some differences between what buyers are seeking and what builders are delivering.
Softwood lumber, oriented strand board (OSB), ready-mix concrete and gypsum products all posted price changes in 2016 well above the 1.3% average for the Consumer Price Index, according to the latest Producer Price index released by the Bureau of Labor Statistics.
More than four out of five builders expect to face serious challenges regarding the cost and availability of labor in 2017, according to a recent survey of members that ran in the monthly NAHB/Wells Fargo Housing Market Index.