The number of permits issued to build new houses in the Omaha area climbed again last year, hitting the highest count in a decade.

Builders and industry-watchers expect continued strength in homebuilding activity at least through the rest of the year, yet many are wary that rising costs of land and construction could rain on their parade.

“I don’t want to be a doomsdayer,” said Dave Vogtman of the Home Company. “But we’re headed for costs getting out of control.”

For now, he said, sales are “brisk” and families are custom-building homes despite costs that could be $40,000 higher today than six years ago.

Greg Frazell of G. Lee Homes said he keeps anticipating a slowdown that hasn’t come. He said one client was just lamenting the toll of the stock market dive and, in the next breath, added frills to the house he was having built.

“It seems kind of crazy, but it’s busy, people keep calling,” Frazell said.

How to explain the activity? Frazell, also vice president of the Metro Omaha Builders Association, said consumers seem more confident in their own financial situation and in the economy. Existing home values have risen to the point that many homeowners now want to sell their place to build anew.

Additionally, builders say, the inventory of existing houses for sale in the metro area has been so tight — down to 1,785 compared with a high of 5,400 houses in 2007 — that more people are turning to new construction.

“People are asking themselves, ‘Why settle for a used house?’ ” said Shawn McGuire of Celebrity Homes. “We become more of a consideration for them — not only us, but new homes altogether.”

According to information compiled by the Greater Omaha Chamber of Commerce and City Planning Departments, about 2,850 permits to build single-family homes in the Omaha area were issued in 2017 — that’s up 8 percent over the year before.

MarketGraphics of Nebraska, which tracks homebuilding activity in 21 markets across the United States, said its figures show annual permits from 2016 to 2017 growing nearly 7 percent in the Omaha and Lincoln area. That’s about the same growth pace (albeit not the same in actual permit numbers) as the “hot” Nashville area market, said systems analyst Rick Adams.

Home construction in the Omaha area still remains far below its peak of 2005, when the permit count was nearly 5,500. National recession and housing market woes pushed area permits to a low in 2011. After a few ups and downs, permit numbers have climbed the last three years.

Adams expects further growth for a couple of years.

“Not an eye-opening number — modest growth,” he said. “The economy and the market is still growing, recovering, and it will probably continue to grow for another couple of years.”

A challenge, however, could be in the development of land and lots upon which to build houses. To meet the projected demand, the Omaha and Lincoln areas need to develop 22,438 lots in five years, Adams said, calling that a “monumental challenge.”

Permit requests in 2017 show Elkhorn, Papillion and Bennington as among the most popular homebuilding areas.

So far this year, the median sale price for a newly constructed home was nearly $310,000, up about 10 percent from $283,000 last year.

Builders say higher costs for components such as land, labor and lumber make it nearly impossible to build a new house for less than $175,000.

Celebrity Homes, identified by MarketGraphics as the area’s most prolific builder in 2017, is able to offer some new houses at that lower range because of its high production. McGuire said the company sells from the $170,000 price point to about $350,000. He said its homes are in various stages of construction, so move-in times can be relatively shorter.

Other builders such as the Home Company, whose sales range from $270,000 to $400,000, have tried to offset rising costs by offering, for example, smaller space yet the same high-end amenities.

Vogtman foresees a healthy homebuilding pace through the first half of 2019 as demand remains unmet. “The question is: What happens after that?”

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