News Column

Homebuilders Concerned Over Growth Pains

March 19, 2013

Chelsey Levingston, Hamilton JournalNews, Ohio

As the critical start of construction season approaches with spring, homebuilders are concerned about supplies of ready-to-build land, building materials and workers, according a national index released Monday gauging home builder sentiment.

The National Association of Home Builders/Wells Fargo builder sentiment index out Monday fell to 44 from 46 in February. It was the second decline since January, which was preceded by eight straight monthly gains. A measure of current sales conditions declined from February's reading.

Readings below 50 suggest negative sentiment about the housing market. The last time the index was at 50 or higher was in April 2006.

As demand returns for new homes, lots ready for home construction are being absorbed. Builders and developers have trouble getting credit to start new residential developments, especially custom builders, said leaders of local homebuilder groups.

A handful of builders in Miami County control most lots of land ready for construction, said Donna Cook, executive director of Western Ohio Home Builders Association, a trade group representing home construction businesses in Champaign, Clark, Logan and Miami counties.

At this time "we don't have a lot of new developments in the pipeline to offer other builders lots to be built on," Cook said.

New home construction activity is improving throughout southwest Ohio, but builders are worried about rising prices of building materials. Some key industry suppliers consolidated following the housing slump. And volatile oil prices affect asphalt and delivery costs of materials to construction sites.

"I keep telling people we're not healthy yet, but we're getting better," said Walt Hibner, executive director of Home Builders Association of Dayton.

Other challenges are financing and low-valued appraisals. Foreclosure rates still affect comparable home sales used by appraisers to qualify loans to buy new homes, Cook said.

Those constraints could slow sales in the short term. But builders' outlook for sales over the next six months has reached its strongest point in more than six years.

The Associated Press contributed to this report.

Source: (c)2013 Hamilton JournalNews (Hamilton, Ohio) Distributed by MCT Information Services

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