Amid a national housing affordability crisis, the number of single-family building permits in the nine-parish greater Baton Rouge area is projected to drop 3% to 3,451 units by the end of the year.
That’s according to Robert Dietz, chief economist for the National Association of Homebuilders, who forecasted national and local residential trends during his keynote address Thursday evening at an event hosted by the Home Builders Association of Greater Baton Rouge.
“There isn’t that much mortgage financing out there,” Dietz said. “Home prices are rising because there isn’t enough inventory.”
Several supply-side factors are also contributing to the rising costs, he added, including the price of lumber, which rose 63% to a peak in 2017 but has dropped 17% since January 2018 to $363 per thousand board feet. Also driving up costs are a construction labor shortage—which translated to 379,000 open positions nationally in August—as well as increasing regulatory costs, which went up 29% between 2011 and 2016.
However, local home builders have a few positive things to look forward to in Dietz’s forecast. The local homeownership rate in Baton Rouge is 68%, higher than the national average, and, with more entry-level homes in the market, the gap is narrowing between the prices of new and existing homes.
What’s more, building 3,451 single-family homes produces 2,087 full-time local jobs annually and yields some $412 million in revenues.
“Building confidence is trending higher,” Dietz said.
