Builders Remain Worried about Housing FlawsMarch 1st, 2013 by DWM Magazine
The budding housing revival driven by pent-up consumer demand still faces a number of obstacles, including tight credit for builders, according to the according to the National Association of Home Builders (NAHB). The precarious support system to housing could threaten the fragile housing and economic recovery now under way, says NAHB.
“I talk to many of our builder members who are expressing increasing frustration that they can’t get access to construction loans to develop lots in markets where demand is on the upswing,” says NAHB chairman Rick Judson, a home builder from Charlotte, N.C. “Not only is this keeping workers sidelined, it is frustrating potential homebuyers and slowing the recovery.”
With the peak spring home building season just weeks away and inventories of new homes at or near record-lows in many markets, NAHB says builders should be ramping up to meet demand and create new jobs.
“Though some metros are still struggling to recover, conditions in a growing number of markets are improving, and those are the areas where we should be hiring construction crews at a healthy clip,” says Judson. “Unfortunately, new-home production is facing a number of obstacles and failing to bounce back at a more robust rate. Builders can’t obtain financing to construct new homes and developers have not been able to restart the lot production pipeline because of the lack of credit, which is contributing to buildable lot shortages in some markets.”
Meanwhile, creditworthy borrowers can’t obtain mortgages, inaccurate appraisals are leading to cancelled home sales and rising building material prices and spot labor shortages are pushing up costs and slowing completion times.
“With the severe declines in housing over the past years, many building material manufacturers such as drywall producers and lumber firms had to close plants and cut back production dramatically,” adds NAHB chief economist David Crowe. “Now, with the NAHB/First American Improving Markets Index showing that many housing markets are on the mend, the supply chain is starting to strain.