Suppliers of glass, drywall and wood products, who reduced output during the slump, are testing the vigor of the rebound by boosting prices before committing to restore capacity. Builders, including Lennar Corp. (LEN), Toll Brothers Inc. (TOL) and KB Home, are asking homebuyers for more money as a result or are delaying sales, posing a temporary hurdle for the industry that has become one of the pillars of the economic expansion.
Building-material manufacturers “are raising prices dramatically, and once they’re convinced that these prices are going to stick, they’ll start reinvesting in those plants,” helping ease supply constraints, said John Burns, chairman of Irvine, California-based John Burns Real Estate Consulting, which provides research to developers, construction-product manufacturers and investors. “Those can take a year to get up and running.”
In a sign demand remains strong, a report yesterday showed sales of new houses advanced in March, capping the best quarter for the industry since 2008. Purchases of new single-family properties climbed 1.5 percent to a 417,000 annual pace, the Commerce Department said.