2018-04-25 — bloomberg.com
The S&P CoreLogic Case-Shiller index showed property values in 20 major U.S. cities climbed 6.8 percent in February, the biggest year-over-year gain since June 2014. Government data revealed a faster-than-projected rate of new-home sales in March and huge upward revisions to the prior two months... Now, with the costs of lumber and other building materials soaring together [on top of higher mortgage costs], buyers are unlikely to see any relief for some time.
The framing of homes, or putting up roofs and walls, accounts for 15 percent of the cost of construction. A composite measure of the cost of lumber for framing rose 16 percent from December to March ... and it's not just lumber. A Labor Department gauge of prices paid at the producer level for construction inputs -- everything from particleboard and plumbing to concrete and insulation -- was up 5.1 percent in March from a year earlier, the biggest annual advance in nearly eight years.
So far, neither higher home prices or a four-year high in mortgage costs have been enough to dissuade buyers. Results of the Conference Board's consumer confidence index on Tuesday showed 1.7 percent of the group's respondents in April planned to purchase a new home in the next six months, matching the highest share in this expansion.
At some point, affordability will become a bigger issue for those wanting to own a home. So far though, consumers are taking higher home prices in stride and builders remain relatively upbeat about the market's prospects.
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