Material cost increases on the horizon for homebuilders

The pace of recovery in private residential construction has been choppy; however, housing starts will total 1.15 million in 2015 and 1.25 million in 2016.

According to Moody’s, these volumes mean the sector will remain positive for building material producers and suppliers. In other words, homebuilders can expect to see material price increases in the next 12 to 18 months if producers plan to grow operating incomes by 10 percent during the period.

In May, Moody reports total housing starts were up 5.1 percent — and total permits rose 26.7 percent — when compared to the same period last year.

“We expect private residential construction to remain healthy through 2015 supported by employment gains and low mortgage-interest rates. It is further supported by pent-up d…