Below: Prime locations for new home building – in areas with good schools or near job centers – is becoming increasingly scarce, due to a shortage of developed land caused by the recession.
Homebuilders Face Land Shortage Builders bullish over the
New Construction Spending Hits 29-Month High
Above: Construction spending continues to improve with the housing market, up 11.3 percent in May (seasonally adjusted) from the 12-year low set in February 2011.
Construction spending, boosted by the rebounding housing
market, reached an unexpected 29-month high in May. Spending increased 0.9 percent from the month before, to a seasonally adjusted annual rate of $830 billion, 11.3 percent above the 12-year low reached in February 2011. A U.S. Census Bureau report found that residential construction rose 3.0 percent in May and 8.0 percent year-over-year, to a total of $261.3 billion. New multifamily construction, which has increased every month in 2012, rose by 6.3 percent month-to-month and 50.3 percent year- over-year, while single-family homebuilding was up 1.8 percent and 14.8 percent respectively.
improving housing market could soon hit a snag – a lack of developed land available for home building. Lots for new homes, especially in desirable urban and suburban areas, were prepared at a breakneck pace before the market crash. Developers encouraged by the constant growth during the housing boom graded land and installed power and sewage lines to meet the high market demand. When the housing market crashed,
quickly by the recession, lots already developed slowly filled in with new homes, and owners of undeveloped land sat out the crash and waited for prices to improve. Now that the housing market has turned upward,
the lots finished before the downturn are nearly full, but not enough new land has been developed to take its place. This shortage may cause a lull for homebuilders – and related industries like landscape contractors – through 2013, even as the shortage in new homes creates bidding wars and drives prices up. However, recent reports that banks are ramping up foreclosures once again could stifle price increases as more distressed homes reach the market next year.
Information Request # 374
Information Request # 393 August 2012 35