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How rising building costs could affect new home buyers

When it comes to buying your first home, many Michigan families worry most about the headaches generally associated with first homes. Whether it's the expense of remodeling or replacing the entire roof after the first week of moving in, most people would rather forego these headaches and buy a new home instead.

But 2013 may not be as promising for these hopeful buyers, says the National Association of Home Builders who is predicting a decline in the number of new homes being built this year across the country. Their reasoning: builders can't keep up with the demand.

With consumer confidence and the economy on the rise, more and more people are getting back into the real estate market in hopes of buying a home. But despite the low prices and affordable mortgage rates, builders are running into serious drawbacks that will severely limit the number of new homes they churn out this year.

Rising building materials and labor costs, and a limited number of ready-to-build lots are partially to blame says the NAHB. The Wells Fargo Housing Market Index also points to tougher credit and appraisal standards as another reason newer homes may not be as common in 2013.

But despite the prediction that fewer newly built homes will be on the market this year, many experts say that this will likely have little impact on the growing number of people currently looking for homes on the market. And with loan rates and home prices expected to stay relatively low over the course of the next few years, people looking to avoid a headache by buying a new home may find that renovating an older home may be better than buying new.

Source: The Loss Angeles Times, "Trade group: Housing demand exceeds builders' ability to deliver," E. Scott Reckard, March 18, 2013

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