Builder Confidense at Highest in 12 Years
by HBA of North Georgia on 03/23/17
Optimism among single-family builders this
month is the strongest it has been since 2005. Much of this positive
sentiment stems from the widely anticipated reductions of government
regulations. A prime example was the recent executive order to roll back
the Waters of the United States rule that affects builders' and
developers' wetlands permits. However, we can expect some moderation in
builder confidence in the months ahead, as interest rates rise and
headwinds persist
for access to lots and labor.
As expected, last week the Federal Reserve
increased the short-term federal funds rate for just the third time in
the post-recession era. Much of the Fed's stance is fueled by a
strengthening labor market, which added 235,000 jobs last month. As the
rate of inflation approaches the 2% target rate, NAHB forecasts two
additional rate hikes this year.
Additional price pressures can be seen on
the supply side of the industry. Gypsum prices have increased more than
6% in the first two months of 2017, and softwood lumber prices rose
almost 5% due to the ongoing lumber trade dispute between the U.S. and
Canada. As housing starts continue to rise in the months and years
ahead, additional sources of lumber will be required.
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