Community Impact Newspaper spoke with Keith Luechtefeld, president of the Greater Houston Builders Association, on June 28 about the current real estate market and the effect of increasing material costs on builders in the region. Here is what he had to say about how the industry has been affected by those and other factors such as COVID-19 and low interest rates.

What is the general mood among builders regarding the current real estate market?

Well I think the mood is good, but most builders are conservative by nature, and we realize it’s a cyclical business, so we’re ... cautiously feeling good, selling homes at a good pace. Pricing has risen at a rate than is more than what we would like, but some stability [will] start to return to the market at some point here too, ... and we’ll see a little more normalcy.

Are materials other than lumber affected by price increases?

[Builders will] tell you they are getting pressured on cost increases from many fronts, not just lumber; that has been the most dramatic, but certainly some labor trades saw some increase in plumbing, some increases on metal prices ... and that impacts some of the things we put in the house. Lumber has been the biggest and most noticeable, but cost increases run the gamut across many different aspects of building a house.

Are builders affected by any industry workforce shortages?

The labor market is OK, but we’re building a lot of houses, and so we have stretched current capacity to I would say near its limits, but I don’t think that ... you can’t have an increase in starts in the type we have had and not expect capacity to be constrained a bit. We’re seeing some challenges, but it’s still an acceptable trade labor market.

What is attractive about master-planned communities?

They offer some comfort, not just to a builder but to everybody involved ... one of the great things about Houston is it’s largely unzoned, and that provides a lot of opportunities for builders. ... When it’s good, you expand, and when it’s slower, you don’t build as many. Master plans offer a level of comfort to both buyers and builders not only what will be next to them, but the ability to access amenities like pools and parks. I do believe master plans are a very viable and attractive component of the market.

Do you expect any long-term changes to houses in the post-COVID-19 era?

Clearly working at home is not a new phenomenon, but it has grown dramatically. It’s not going to go back to the way it was. People will return to an office setting, but certainly we have shown over the past year it’s possible to be productive when working from home. However, people would prefer to have some level ... of privacy in their work-from-home environments. Work-from-home is a big component, but that’s not exactly new. If I look at a lot of what builders do, many builders provide a study opportunity in most homes anyway, but [more] people are taking advantage [of it].

What else would you want prospective home buyers to know right now?

Interest rates ... even if they tick up a half a percent or a percent, these are historically unbelievable interest rates and mortgage rates [right now], and it affords people the opportunity to acquire the American dream in ways that were harder to do when interest rates were [in the past].