Starved of Credit, Construction Suppliers Lag Housing Rebound

Builders are struggling to meet orders as they combat a shortage of building supplies. Regional building products makers are operating under tight credit conditions, with trimmed workforces. In some cases, these factors are not allowing them to raise production enough to meet rising demand. The credit shortage comes as big banks, facing increased federal regulation, are reluctant to lend to small suppliers while the small regional banks that once sustained the industry were swallowed by larger banks or dissolved.

The failure of banks with less than $1 billion in assets was largely caused by credit losses on commercial real estate loans. Construction companies are also experiencing a labor shortage as those unemployed by the 2007 crash are reluctant to return to the volatile industry. Shortages in OSB boards were reported by 22% of homebuilders in June.

From "Starved of Credit, Construction Suppliers Lag Housing Rebound"
Reuters (07/15/13)

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