Minimal growth forecast in area home sales, construction

The national unemployment rate is 4.4 percent, the lowest it’s been since July 2011. Mortgage rates remain low. Conditions are perfect for strong home-construction numbers in 2016, analysts say.

But a return to the sales and construction levels that existed before the real-estate market bust in 2008 is not in the forecast.

New residential construction in the region saw a spike in 2012 but otherwise have remained steady in recent years, and new home construction is not expected to rise in 2016.

This does not follow the national trend. The Associated Press reported new-home sales climbed nearly 15 percent through the first 11 months of last year, and construction of single-family homes hit an eight-year high in November. The U.S. Department of Housing and Urban Development reported residential building permits in December were up 14.4 percent from estimates from December 2014.

But the increase in demand for new residences also brings with it the issue of labor.

Justin Keen, a lender at Capaha Bank, has observed the effect the demand for new construction has had on labor prices. Keen said applications for new-home loans have increased in recent years, but the challenge many potential homeowners face is production costs are becoming prohibitive.

“Construction costs have gotten to where it’s a fight for contractors to now build and keep the cost under the appraised value,” he said.

“... Housing markets are improving, but lot and labor shortages continue to be a problem for many builders,” Tom Woods, chairman of the National Association of Home Builders, said in a news release.

The AP reported construction companies added 215,000 jobs last year, a 3.4 percent gain.

“Most contractors that I have dealt with are very conscious of keeping costs within the appraised value,” Keen said. “Demand is pushing up prices in regard to what contractors can demand, and also the cost of building supplies.”

“I expect the numbers will stay about the same as last year,” said Gary Turner, broker at Coldwell Banker Select and Treasurer of the Cape Girardeau County Board of Realtors, about new home constructions. “I don’t think we’ll see a decline.”

bbrown@semissourian.com

(573) 388-3630

Pertinent address:

727 West Main St., Jackson, Mo.

1223 N. Kingshighway, Cape Girardeau, Mo.