So far in 2014, new home construction throughout Southwest Florida has remained right where it left off last year — with builders rushing to complete new homes to meet heightened buyer demand.
But some of the pressures that pinched homebuilders across the country last month — from labor shortages to rising land and material costs — are raising concerns about the durability of the industry’s robust recovery here.
Following homebuilding’s best year since the mid-2000s housing boom, local governments in Southwest Florida issued more new residential building permits in January than the same time in 2013.
“Typically January through April — those four months of the year — there’s a big uptick in activity,” said Britt Williams, president of area homebuilder Bruce Williams Homes.
“Traffic is still heading up, sales are strong, and we’re encouraged. I’m not seeing anything on the immediate horizon that would slow us down.”
Homebuilders pulled 216 permits for single-family homes in unincorporated Sarasota and Manatee counties in January, down just one permit from December but up 12 percent from the same time one year ago, according to government data.
By comparison, construction of new homes nationwide tumbled in January, largely the result of bitter cold and heavy snow in much of the country.
In all, U.S. housing starts fell 16 percent last month to a seasonally adjusted annual rate of 880,000, the lowest level since last September and the largest month-over-month decline since February 2011, the Commerce Department said Wednesday.
Permits indicate homes on which construction is expected to start within 90 days.
The latest increase comes just before the annual Parade of Homes regional event, which is slated to open on Saturday. The three-week event typically boosts builder activity as buyers sign purchase contracts after touring models.
But some signs point to slower growth into the future.
Lingering labor shortages in skilled trades such drywall hanging, framing and roofing are increasing sales prices and lengthening the time it to takes to finish homes.
Despite the recent gains in homebuilding, only 49 percent of the construction jobs in Southwest Florida during the boom a decade ago and lost during the prolonged downturn have returned, according to federal data.
As of December, the construction industry employed 16,700 workers in Sarasota and Manatee counties, an 8.4 percent increase over the same time last year. By comparison, total homebuilding activity has risen 25 percent during that same time, records show.
Land acquisition costs also are ballooning, as competition for buildable lots in desirable areas has intensified.
And material costs — from concrete to lumber — are projected to jump by 15 percent this year, as suppliers who waited out the recession attempt to raise prices to recoup losses.
Those factors could hamper the construction recovery, which is expected to stabilize after the peak spring selling season.
Already, market conditions are beginning to weigh on national builders.
“You don’t have to go very far north to see winter is in full-force — and you can’t build very much in a blizzard,” said Alan Anderson, executive vice president of the Manatee-Sarasota Building Industry Association.
“We don’t have that issue here, and things are tracking along,” he added. “But we still have some labor problems, though we believe new sales numbers will be in line with last year, and in some areas even improve.”
The brisk start to 2014 keeps pace with new residential construction that climbed to its highest level last year since the real estate bubble of the mid-2000s.
Builders broke ground on 1,041 single-family homes in the Sarasota-Bradenton metropolitan statistical area during the fourth quarter, according to data released this week by industry researcher Metrostudy Corp.
That represented an increase of nearly 42 percent compared to last year’s rate. Through the year, new home starts rose by 51.2 percent in the area to reach a total of 3,749 units.
The Sarasota-Bradenton area now has more homes under construction than any point since 2006. But activity remains well below the area’s historical 20-year average of around 5,500 starts.
New home inventory — which is composed of units under construction, finished vacant homes and furnished models — totaled 1,850 units at the end of year, according to Metrostudy.
That figure represents a 6.9-month supply at the current sales rate — an inventory that is considered to be near equilibrium between a buyer and seller’s market.
Industry observers attribute those gains to pent-up demand from baby boomers, who are moving to coastal areas like Sarasota to buy retirement homes after waiting out the Great Recession.
Many of those sales are the result of stock market strides, inheritance windfalls and improving housing markets in the north, which has restored the equity needed to sell and move.
“We anticipate this will be an up year, but we’re still far from what a typical Sarasota year would look like,” said Tony Polito, regional director of Metrostudy’s Sarasota division. “The percentages are so big because you’re starting at such a low base number, and it will probably take until 2015 to get back to our average.”
Some areas also have surged ahead of others, with Lakewood Ranch and Eastern Manatee County leading the way.
That is largely because there’s still abundant developable land in those areas, with nearby amenities that also draw in buyers.
Last year, builders sold 618 new houses in Lakewood Ranch, an 8 percent annual improvement for the master-planned community. The average price for those Lakewood Ranch homes last year was $417,000, according to community developer Schroeder-Manatee Ranch Inc.
There are now 295 homes under some stage of construction there.
“Our traffic is good; I’m seeing some big numbers,” said Jimmy Stewart, vice president of sales for LWR Communities. “People have confidence. They’re buying large lots and building expensive homes.”
Even luxury building is picking up.
This weekend, custom builder John Neal Homes will open his first new model in seven years in University Park, a posh gated community between Sarasota and Manatee counties.
In the Lake Club — the most upscale subdivision in Lakewood Ranch — there are now 33 homes being built. Units in the tony community fetched an average price above $1.3 million last year, records show.
Across the country, homebuilders pulled new building permits at a seasonally adjusted annual rate of 937,000 in January.
That was 5.4 percent below a revised December rate, but it remains 2.4 percent above the estimate from January 2013, according to data released Wednesday.
Housing starts suffered a more immediate setback during the month, with builders unable to break ground on sites that have already been permitted.
Housing starts in January were 2 percent behind the pace from the same month last year.
Much of those losses came in areas that were battered by frigid winter conditions.
But those temperatures bode well for the Sunshine State, with searches for Florida real estate exploding on popular homebuying websites early this year.
Overall permit activity was down 10.3 percent in the Northeast and 26 percent in the West. But totals actually rose 8.6 percent in the Midwest and 3.4 percent in the South, which includes Florida.
Volatile interest rates, dwindling affordability and looming uncertainty in Congress remain the biggest threats to that recovery, national homebuilder groups contend.
“We’re projecting higher permit growth this year than we saw last year,” said David Guarino, a senior research analyst with John Burns Real Estate Consulting.
“We had some really cold conditions in areas that just couldn’t handle the snow, and that really skewed the numbers. I think we will see that pent-up demand come back, and if you’re sitting in four feet of snow, Florida starts to look really attractive right now.”
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