The perfect storm of high demand, rising interest rates, and increased material costs combined with a shortage of inventory and skilled labor has led to the largest increase in both existing and new home costs in nearly four years. According to the S&P CoreLogic Case-Shiller index, property values in 20 major U.S. cities soared 6.8 percent in February, the largest year-over-year increase since June 2014. The rate of new home sales in March also exceeded projections by the federal government, who recently revised their numbers for the first two months of the year to reflect the sharp increases. Consequently, the inventory of existing homes currently stands at a 19-year low, and builders nationwide are struggling to build enough new homes to satisfy buyers clamoring for houses — even at increased prices.
That’s right, home builders are actually reporting that they’re having no trouble passing the increased cost of construction materials — which account for the lion’s share of a home’s cost according to the National Association of Home Builders — along to consumers. And these cost increases are not insignificant! According to data from Random Lengths, a publisher of information on wood products, the price of framing lumber rose rose 16 percent in just three months from December of last year to this March. And according to the Department of Labor, the overall cost of building supplies from roofing and insulation to electrical conduit and copper plumbing rose 5.1 percent in the last year.
And it’s not just supplies — labor costs have also gone up as the increase in building across the country has spread the supply of qualified workers ever thinner. Yet the Conference Board’s consumer confidence index released on April 17 showed 1.7 percent of the group’s respondents that month planned to buy a new home in the next six months, while a survey conducted by the University of Michigan in March said they felt now was a good time to buy, as they believed that prices will only continue to rise.
But while contractors across the country will continue to reap the benefits of this scorching housing market, when it comes to independent builders, it’s those among the ranks of CBUSA members will stand to profit the most. That’s because CBUSA locks in special manufacturer pricing with multi-year national contracts – that substantially limits cost increases. So while other independent builders paid an additional 10-15% for products like engineered wood, garage doors, appliances, water heaters, and HVAC equipment, CBUSA members paid only modest increases and in some cases no change was experienced.
And though it’s true that this is one of the most lucrative building periods in decades, now is the time to add more profits to your bottom line for growth and sustainability to insure your company is better prepared for the next economic correction.
Would you like to take advantage of exclusive CBUSA member perks that can help your firm make the most of the current housing market? Contact us today!