Home inventory and construction labor shortages are taking a toll on housing markets in the southeastern portion of the United States.
Regional brokers blame a lack of inventory for holding back sales, despite May sales beating year ago levels, the Federal Reserve Bank of Atlanta said in a new report.
Homebuilders also remain frustrated at their inability to secure construction financing — another factor holding back seller activity.
Those are not the Fed Bank’s only concerns. A deficit in workers, particularly skilled trades, combined with a shortage of available inventory and tighter mortgage qualification standards are hindering the housing recovery.
Most brokers reported that home prices were ahead of the year-earlier level. At the same time, homebuilders saw labor and material costs edge up, rising somewhere between 1% and 4% on a year-over-year basis.
While it’s unlikely the shortage will lead to disastrous national numbers in housing, homebuilders have reported lack of access to labor has lengthened their construction timeline, according to Fitch Ratings.
“We believe the degree of labor shortage will depend on the pace of recovery,” the credit ratings agency noted. “If the pace is moderate (which we expect) in 2013 and 2014, the shortage will only be prominent in certain markets.”
Overall, homebuyer traffic remained robust in May. Additionally, the outlook among housing contracts remained upbeat.
“The outlook for sales over the next several months among brokers was much more positive than a year earlier while the builders’ outlook is similar to views expressed last May,” said Whitney Mancuso, senior economic analyst for the Atlanta Fed’s Research Department.