Photo: Robert Clark
Despite persistent affordability concerns and record-low inventory levels, US home sales continued to rise in August.
Wide-spread labor shortages and tariffs on imported lumber have added thousands of dollars to the cost of new construction homes, according to a new report by the National Association of Home Builders (NAHB).
The Trump administration imposed a 20 per cent tariff on softwood imported from Canada in the summer of 2016 and more recently imposed a 25 per cent tariff on over 5,700 Chinese imported goods — some 400 of which are used in residential construction including items like cabinets and countertops, as well as tools like nails and saws.
“We’re not seeing a huge impact from the Chinese tariffs yet, but the tariff on Canadian lumber is adding over $8,000 to the price of a new construction home. Prices are coming down, but the tariff will still add anywhere from $2,000 to $3,000 per build,” NAHB chief economist Robert Dietz tells Livabl.
In August, sales of new construction single-family homes rose 3.5 month-over-month to a seasonally adjusted annual rate (SAAR) of 629,000 units after a downward revision in June and July reporting.
The downward revisions suggest softness in new home sales activity this summer, reads the report.
However, sales were up nearly 7 percent year-over-year in August.
“New home sales ticked up in August, due to positive demographics and a strong overall economy,” says NAHB chairman Randy Noel, in a statement.
The inventory of new homes for sale was 318,000 in August and the median sales price was $320,200.
Demand for homes is high, but builders are concerned about keeping costs down as supply dwindles.
“The skilled labor shortage is having the greatest impact on the slow growth rate of the industry. Housing could grow exponentially faster if there was more labor available,” says Dietz.
The housing industry added between 80,000 and 100,000 new workers over the last year, but over 270,000 jobs remain unfilled — a post-recession high. The number of unfilled positions has remained above peak levels for the last two years.
While the labor shortage is the chief concern of home builders, rising lumber costs impedes construction. And construction levels are further hampered by the lack of available land and lots, strict federal and local regulation and tight lending policies.
NAHB and other industry experts are keen to see how the 25 percent tariffs on Chinese imports will impact overall housing prices in January 2019, when the increased tariffs are set to kick in.
“There’s $20 billion in Chinese tariffs connected to the housing industry. The cost is going to be passed on to the consumer,” says Dietz.
Click here to read the release.