Builder confidence lags on tight lending and low appraisals

By Inman News, Tuesday, March 19, 2013

Homebuilders were a lot busier in February than they were a year ago, starting construction on 27.7 percent more units.

Aside from the 982,000 mark seen in December 2012, February’s seasonally adjusted annual rate of 917,000 home starts was the highest since July 2008 when it reached 949,000.

Housing starts of all types were up 0.8 percent from January to February, and have climbed by about 90 percent from a post-collapse bottom in early 2009. Single-family starts are up about 75 percent from their post-bubble low, pointed out Bill McBride on his blog Calculated Risk.

Single-family housing starts in February were at a rate of 618,000, a 31.5 percent jump from a year ago and up 0.5 percent from January.

Source: Calculated Risk

Builder confidence slipped for the second month in a row in March as builders are dealing with the growing pains around restarting an industry, according to a monthly survey from the National Association of Homebuilders (NAHB).

“In addition to tight credit and below-price appraisals, home building is beginning to suffer growth pains as the infrastructure that supports it tries to re-establish itself,” said NAHB Chief Economist David Crowe in a statement.

And demand isn’t the issue, noted NAHB chairman Rick Judson.

“Although many of our members are reporting increased demand for new homes in their markets, their enthusiasm is being tempered by frustrating bottlenecks in the supply chain for developed lots along with rising costs for building materials and labor,” Judson said in a statement. “At the same time, problems with appraisals and credit availability remain considerable obstacles to completing deals.”

All regions saw significant year-over-year increases in their housing start rates in February with the West leading the way with a 63.4 percent jump, followed by the Northeast, Midwest and South with increases of 56.1 percent, 33.3 percent and 10.5 percent, respectively.

Month-over-month, the Midwest and Northeast saw housing start rates reach double-digit growth in February from January with 37.5 percent and 18.4 percent increases, respectively.

The West and South, however, saw dips in their annual rates in February from the month before with drops of 7.2 percent and 5.7 percent, respectively.