Home builders are increasingly concerned with the now-expired Softwood Lumber Agreement. The uncertainty surrounding a new trade agreement is impacting businesses on both sides of the border, as it was the primary culprit behind the surging lumber prices so far this year.
Nationwide housing starts rose 3% in February from an upwardly revised January reading to a seasonally adjusted annual rate of 1.288 million units, according to newly released data from HUD and the Commerce Department.
The cost of building homes is going up.
The latest Producer Price Index release by the Bureau of Labor Statistics shows that prices of softwood lumber, gypsum, ready-mix concrete and OSB all rose in February. The increases were led by gypsum products, with softwood lumber a close second.
Compared to 2015 totals, townhouse construction increased 12%, and custom single-family homes grew 8% in 2016 to a post-recession high. Much of this is due to an easing of credit standards and the return of more first-time home buyers. But in 2017, many of the same challenges will persist.
NAHB’s Multifamily Production Index (MPI) posted a gain of two points to 55 in the fourth quarter of 2016. The MPI has been at 50 or above for five straight years.
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.