Metro-area home builders pulled back at midyear, starting exactly one more house last month than in June 2020.
Those 454 houses and the mere 0.2% increase they represent suggest that rocketing prices for building materials — and supply shortages and delivery delays — finally caused them to put the brakes on.
It was an abrupt slowdown, compared with most of the first half of the year.
January's 484 new-home starts were down 3.4% compared with the year-ago number, but February-May saw bounding increases of 7%, 21.5%, 77.6%, and 45.3% according to Dharma Inc.'s Builder Report.
It all left construction ahead of last year 21.8% compared with the first half of 2020.
Fed: 'Expect moderate declines' in construction
The stats went flat in June even with demand for houses still robust, although it has cooled somewhat.
"With interest rates still extremely low, Ideal Homes & Neighborhoods is seeing a higher sales volume than the same time period in 2019, but sales are trending toward a more normal volume compared to the previous 12 months," said Erin Yarbrough, the Norman-based builder's director of marketing.
Rising costs caused residential construction to soften in several areas of the country, the Federal Reserve reported in its latest Beige Book, a summary of informal surveys from mid-May through June.
The Fed said its contacts "expected moderate declines in the coming month."
That's the case for Ideal, Yarbrough said.
"Supply availability is increasing and rising costs are starting to level off, which is benefiting the homeowner as well," she said. "While our completed homes for sale are still extremely low in inventory, the number of homes completing in the next 30-90 days offers a larger selection of options for home buyers than they’ve had over the past 12 months."
And another thing: School's out for summer
Builders' pullback in June could have been due to other reasons in addition to rising construction costs, said MJ Farzaneh, chief operations officer for Home Creations.
“We don’t believe that the boom is over," Farzaneh said. "Our belief is that when school was out for the summer, families had a pent up demand to get out and travel and therefore are taking what is being called 'The Revenge Vacation” or 'Revenge Traveling.'
"Think about it — people have had nowhere to go for over a year and nothing has been open for them to travel to. Priorities possibly shifted in the short term. That would explain the dip in June with permits."
The shortage of houses on the market is no surprise and is not solely a consequence of persistently historically low mortgage interest rates, said Lindsay Haltom, director of marketing for Homes By Taber in Oklahoma City.
Underbuilding, lack of lots lead to low supply
"As a state and as a nation, builders have been underbuilding for years and it has contributed to the low inventory levels we are seeing now," Haltom said. "In addition, there is a lack of lots in the area because the process that used to take about a year to bring on a new neighborhood now takes about two years.
"Builders sold through the lots they had and now there is an even smaller amount of inventory for shoppers. Builders have helped increase inventory to balance out the market but with a lack of lots, Homes by Taber is projecting that the housing market will get even tighter with less inventory."
Pricing is dicey for builders — the timing of it — in such an environment, Farzaneh said.
"Everyone knows about lumber, but there have been increases with just about every product that goes into a home," he said. "Just to name a few of the main products, shingles, brick, garage doors, Sheetrock, concrete, copper, HVAC, etc.
"We have decided to hold our pricing and get creative with things that might not be as important to buyers and families with the changing times. By cutting some of those costs, we can maintain our prices for longer."
Read more on The Oklahoman.
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