Inflation Coming Back into the Housing Market

Apr 19, 2017

After reporting homebuilder confidence at a nearly twelve-year high in the previous month, the National Association of Home Builders released a report on Monday showing that the market is starting to slow slightly. Part of the reason might be the sudden rise in building costs. Materials are up 15% already since the end of 2016. US Funds reported that,

"At issue is a mini-trade war between U.S. and Canadian loggers. For some time now, the American lumber industry has blamed its Canadian counterpart of unfairly dumping lumber in the U.S. that’s far below market value. Now, several factors are pushing timber prices higher. Chief among them are the likelihood of duties being raised at the Canadian border, possibly as early as next month; President Donald Trump’s calls to renegotiate NAFTA; and growing demand for new homes following the housing crisis as consumer optimism improves and millennial buyers finally seem eager to enter the market.”

But if prices keep rising at double digit rates, many are going to be squeezed out of the market.