Builder Confidence Highest in 11 Years

In a recent Ask the Economist article in DSNews, Robert Dietz, Ph.D. was featured, and he discussed multiple factors contributing to builder confidence in the real estate world – and he has the data to back it up.

Dietz is Chief Economist and Senior Vice President for the National Association of Home Builders (NAHB).

When asked to comment on the NAHB’s housing market index reflecting an 11-year high in builder confidence, Dietz said that builders are optimistic about the prospect of less regulation after the election.

“One of the key concerns is the rise in regulatory burdens that adds to the baseline cost of a home. Earlier this year, NAHB released a paper that estimated that regulatory costs associated with land development and residential construction have increased 29 percent over the last five years and make up nearly a quarter of a home’s final sales price.”

While it’s really just speculation at this point, less costs and regulation associated with construction means a more profitable business for builders and potentially lower prices for buyers.

He goes on to say that the NAHB expects an increase of 10% in single family construction this year but single family residences alone can’t fix all of the current issues with supply, stating, “What’s needed is an industry-wide effort (builders, other housing stakeholders, community colleges, and high schools) to attract the next generation of construction workers.”

Dietz finished by touching on his final point that we need more GDP and more job growth, indicating that home building and remodeling are responsible for approximately 3.5% of GDP.

What About Alternative Housing?

One thing it would be interesting to hear Dr. Dietz comment on is the alternative housing field. There has been an influx of tiny homes, and there is a recent video that illustrates how a 3D printer can build a 400 square foot home for approximately $10k.


video from CNBC

While it’s not likely that 3D printers will overtake a significant portion of construction anytime soon, the implications of a new industry playing in this field are intriguing to say the least.

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