While new home construction, along with new homes sales, have been one of the bright spots in the national economy during the last year, continued growth may be hampered by rising prices.
Those prices, according to a study issued by the National Association of Home Builders, reflect many market trends, but in particular the rising cost of construction due to a lack of immediate building materials.
Notes Robert Dietz, chief economist with NAHB, just lumber prices alone have seen a 60% increase since November, “adding thousands of dollars to the cost of a new home.”
Despite all that, asserts Dietz, “the overall macroeconomic outlook is expected to improve this year,” predicting an increase in the Gross Domestic Product as well as a lowering of the nation’s unemployment rate.
But, adds Dietz, “these forecasted improvements are dependent on the rollout of the Covid-19 vaccine.”
The economist admits that his generally positive forecast for the upcoming months, “assumes mass deployment of the vaccine between March and September, which should allow for more normalization of the overall economy and continued strength for housing demand.”
The NAHB report comes as home builder confidence has soared, even throughout the most dormant months of the Covid-19 outbreak in 2020, with single family construction in second-home communities up by a significant 24% on a yearly basis.
Even so, new home sales have continued to outpace actual new home construction.
“While strong demand suggests continued gains for home construction in 2021,” adds Dietz, “affordability declines and supply-side limitations will generate lower housing growth rates than those recorded last year.”
By Garry Boulard
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