Mixed economic conditions for builders

MarketWatch on Morningstar:

New-home construction improves despite high inflation, rising mortgage rates, and the shortage of skilled labor and materials

https://www.morningstar.com/news/marketwatch/20220419342/new-home-construction-improves-despite-high-inflation-rising-mortgage-rates-and-the-shortage-of-skilled-labor-and-materials

“Home builders now face some tough decisions. Rising rates are likely to reduce home-buyer demand, but the short supply of homes for sale means that competition will likely remain elevated. The under-supply of homes nationally gives builders plenty of runway to work with -- but memories of the Great Recession linger, and some builders may be hesitant about overcommitting themselves as the market shifts.

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Looking ahead: "The shortage of skilled labor, materials, and lots are persistent headwinds to increasing the pace of new construction. According to the February housing starts report, the number of single-family homes authorized but not started was nearly 25% higher than one year ago because of supply-chain disruptions," said Odeta Kushi, deputy chief economist at title insurer First American.

"Even with rising interest rates and ongoing issues surrounding geopolitical stability, supply chain issues, and inflation, the overall lack of inventory over the past year has continued to drive demand for more housing starts as builders continue to try to push inventory to market," said Kelly Mangold, a principal with RCLCO Real Estate Consulting.“