B2 • Friday, December 17, 2021
THE GARDEN ISLAND
thegardenisland.com
Backlog of home orders favors builders in ‘22 shortages across the country and anticipates they may continue next year. Lumber futures prices LOS ANGELES — U.S. soared to an all-time high homebuilder stocks have $1,670.50 per thousand outpaced the broader marboard feet in May, a twofold ket this year, and analysts increase from a year earlier, are bullish on the prospects reflecting strong demand for for more gains in 2022, denew construction and home spite expectations of continremodeling, and pandemued supply chain woes. The SPDR S&P Homebuildic-related problems limiting production. It then dropped ers exchange-traded fund is to $456.20 in August, but has up 45% this year. Two of the been surging since and is biggest builders by homes now back above $1,100, acsold, D.R. Horton and Lennar, are up about 52% and cording to FactSet. 46%, respectively. The Still, the housing market benchmark S&P 500 index is demand trends, especially on pace for a 23% gain. the low inventory of homes The strong gains reflect infor sale, bode well for buildvestors’ confidence in builders heading into next year. Homes nationally are sellers’ prospects for capitalizing on a red-hot U.S. ing within days of being put housing market that is unup for sale. In October, more than 80% of previously occuderpinned by strong demand, still-low mortgage pied U.S. homes sold after rates and a shortage of being on the market for less homes on the market. than a month. MATT ROURKE / ASSOCIATED PRESS Meanwhile, the supply “I don’t know how that chain bottlenecks have led changes in the near future, A new home is under construction in Philadelphia. New-home construction in the U.S. jumped 11.8% in Nobig builders to build up a so it probably gives homevember as builder confidence continues to rise amid strong demand. The double-digit percentage increase backlog of home orders that last month left home construction at a seasonally adjusted annual rate of 1.68 million units, an 8.3% increase builders maybe an extra shot they won’t be able to deliver from the rate at this time last year, the Commerce Department reported Thursday. or two on goal with getting until next year. buyers that they haven’t had “Early returns from the homes through the first 10 fit from more sales next year. pump the brakes on the tate industry tracker. “Build- in years past,” said Jay Mcwinter suggest reasonable months of this year were up ers would sell more if they number of homes they put The biggest problem Canless, a housing analyst at order strength thus far, up for sale. As a result, many 11% from where they were in had more.” homebuilders had in 2021 Wedbush Securities. which bodes well for the 2020, on pace for at least 6 builders have seen their was being able to build Builders are still dealing That’s one reason the ana2022 spring selling season,” backlog of home orders they million home sold, which homes fast enough to meet with supply chain bottlelyst is bullish on more stock BTIG homebuilding analyst have yet to deliver on swell. would be the highest numthe demand during one of price gains for the 14 homenecks and higher prices for Carl Reichardt wrote in a re- the hottest housing markets The dynamic has helped garage doors, windows, ber in 15 years. builders he tracks. dampen sales of new U.S. in decades. plumbing fixtures and other “If there were no supply “I’m very comfortable and search note. He recently homes in 2021. In October, The global supply chain chain and no labor shortages building materials. optimistic with the group raised his 2022 earnings per new home sales hit a season- we would be growing by disruptions, rising inflation During a recent conferheading into next year,” he share estimates for most of and a shortage of skilled lasaid. “And certainly our the 12 homebuilders he ally adjusted annual pace of double digits in terms of ence call with analysts, housing construction,” said price target suggests there’s tracks, including KB Home 795,000, down 23% from a builder Taylor Morrison bor, led to construction deroom for growth above the and Lennar, citing expectayear earlier. In contrast, sales Ali Wolf, chief economist at Home said it continues to lays and uncertainty that Zonda Economics, a real es- see random building product current prices.” of previously occupied U.S. tions that builders will bene- forced many big builders to Alex Veiga ASSOCIATED PRESS
Mortgage rates up slightly this week to a still-low 3.12% ASSOCIATED PRESS SILVER SPRING, Md. — The average interest rate on a long-term mortgage in the U.S. ticked up slightly this week but remain historically low just as the Federal Reserve announces that it will begin tightening credit. Mortgage buyer Freddie Mac reported Thursday that the average rate on the benchmark 30-year, fixed rate home loan was up this week to 3.12% from 3.10% last week. A year ago, the rate stood at 2.67%. The average rate on a 15-year mortgage fell again this week, to 2.34% from 2.38% last week. One year ago, that rate was 2.21%. On Wednesday, the Federal Reserve announced as expected that it would begin dialing back its monthly bond purchases — which are intended to lower long-term rates — to combat accelerating inflation. That move could raise borrowing costs across the economy in the coming months, but policy changes don’t always immediately affect other loan rates. Even with three rate increases next year, its benchmark rate would still be historically low, below 1%. Demand for housing has surged during the pandemic as people seek more space after being holed up at home for the better part of nearly two years. Even with rock-bottom interest rates, many would-be home buyers have been left empty-handed due to a limited supply and home prices around 20% higher than a year ago. Builders have struggled to keep up with demand as supply chain breakdowns continue to delay projects, compounding the lack of available homes and skyrocketing prices.
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