Even as U.S. housing rebounds from its worst downturn since the 1930s, production bottlenecks are pushing up building-materials costs, land prices are rising and skilled labor ready to begin work is hard to find.

Suppliers of glass, drywall and wood products, who reduced output during the slump, are testing the vigor of the rebound by boosting prices before committing to restore capacity. Builders, including Toll Brothers Inc. and KB Home, are asking home buyers for more money as a result or are delaying sales, posing a temporary hurdle for the industry that has become one of the pillars of the economic expansion.

Building-material manufacturers “are raising prices dramatically, and once they’re convinced that these prices are going to stick, they’ll start reinvesting in those plants,” helping ease supply constraints, said John Burns, chairman of Irvine, Calif.-based John Burns Real Estate Consulting, which provides research to developers, construction-product manufacturers and investors. “Those can take a year to get up and running.”

In a sign that demand remains strong, a report last week showed sales of new houses advanced in March, capping the best quarter for the industry since 2008. Purchases of new single-family properties climbed 1.5 percent to a 417,000 annual pace, the Commerce Department said.

The Standard & Poor’s Supercomposite Homebuilding Index jumped 5.6 percent Tuesday, the most since July 26.

At just about every turn, builders are paying more for materials. The wholesale cost of softwood lumber climbed 30 percent in the year ended March, data from the Labor Department show. Oriented strand board, or wood particleboard, surged 68 percent, while gypsum products such as wallboard climbed 18 percent.

“We’re seeing somewhat of a bottleneck,” said Michelle Meyer, senior U.S. economist at Bank of America Corp. “There’s more demand for these products, which means the housing industry is healthier and the economy is healthier.

“Higher costs are one reason home construction is not rebounding faster,” said Meyer, who projects residential building will add 0.5 percentage point to gross domestic product this year and 0.65 percentage point in 2014, which would be the most since 1983. Last year, it contributed 0.3 percentage point.

Boise Cascade Co., which makes products such as plywood sheathing and laminated-veneer lumber, anticipates a “challenging environment as the industry works to restart capacity and rebuild infrastructure in response to higher demand levels,” Thomas Carlile, chief executive officer, said in a March 7 earnings conference call.

Current pricing reflects “constraints that exist through the supply chain from logging to manufacturing into multiple levels of distribution,” he said.

Deltic Timber Corp. told analysts during a recent earnings conference call that net income in the first quarter of 2013 rose to $6.8 million, compared with $100,000 in the same quarter a year ago, largely because of increased lumber sales. The El Dorado-based company said that while sales volumes were up 9 percent compared with a year ago, prices for the lumber it sold were 48 percent higher year-to-year.

Deltic President and Chief Executive Officer Ray C. Dillon said that Deltic sends many of its products to the Texas market, which he described as strong during the first quarter and which also escaped the adverse weather that struck other parts of the country. Dillon said the national housing recovery that began in 2012 is continuing in 2013, with demand picking up for new-home starts, residential repair and remodeling. That demand “resulted in increased prices for the lumber received by producers.”

KB Home, a Los Angeles based builder that targets first time buyers, has said that in addition to lifting asking prices, it is working with vendors to standardize products and processes in order to take advantage of economies of scale.

The National Association of Home Builders/Wells Fargo confidence index fell in April to the lowest point since October, the Washington-based group said, citing rising costs and financing restrictions.

Toll Brothers, the largest U.S. luxury-home builder, is raising prices in about 60 percent of its communities as demand among high-end customers improves, according to Chief Executive Officer Douglas Yearley. Material and labor costs that rose by $4,500 per home for all of last year were already up by another $3,000 in the first quarter of 2013, he said. About $2,000 of that additional expense was lumber alone, Yearley said.

“We have more than offset those costs with pricing power,” Yearley said during a March 4 conference presentation.

Orders at Meritage Homes Corp. climbed 35 percent and revenue jumped 65 percent as the Scottsdale, Ariz.-based company’s average selling price rose 17 percent, according to a recent statement.

“About half of our price increases are giving way to cost increases,” Chief Executive Officer Steven J. Hilton said during a conference call.

Quarterly earnings for many publicly traded home builders are coming out this month. Sales may meet forecasts while profitability levels will be “a bit more mixed” because of the head wind from costs, Stephen East, an analyst with International Strategy & Investment Group LLC in St. Charles, Mo., said in an April 11 research note.

Unless all metrics, including sales and profits, show improvement, builder shares may suffer, East said in the note.

Financing remains one of the biggest constraints, especially for smaller builders, who arealso hardest hit by rising costs, said David Crowe, the National Association of Home Builders’ chief economist. “We’ll continue to move forward, just not as fast as we could.”

Increasing demand also means there are few experienced contractors idly waiting to jump at the next project.

In some regions, it may take years to rebuild the labor force needed to meet housing demand because many skilled workers “have left in favor of other greener pastures” such as better- paying jobs in the energy industry, said Brad Hunter, chief economist for Metrostudy, a Houston-based home building consulting company.

Phoenix has had the biggest labor shortage, in part because the area’s housing collapse and recovery were more pronounced and also because some Mexican immigrants who worked in construction left Arizona after the state Legislature passed a strict immigration law in 2010 aimed at illegal aliens, Hunter said.

Prices of finished lots in desirable locations may continue to soar, real-estate consultant Burns said. In the wake of the housing crash, developers stopped preparing land for new construction, a process that can take years in states such as California, he said.

Builders are also deliberately slowing production to lift prices while waiting for more land to become available, according to Burns. This is happening in markets including Florida, Arizona and California, and isn’t so common in the Midwest or Northeast, he said.

Marty Mitchell, whose Rockville, Md.-based company builds single-family and town homes, says costs have “really shot up in the past six months or so.” Appraisals have yet to catch up, making it difficult for prospective buyers to qualify for financing and limiting how much builders can charge. Still, “it’s what they call a good problem” because it reflects growing demand, said Mitchell, vice chief executive officer of Mitchell & Best Homebuilders LLC, whose selling prices range from $700,000 to $1.6 million.

Pricier new homes, rather than hurting demand, may divert buyers toward relatively less expensive previously owned ones, said Millan Mulraine, an economist for TD Securities USA LLC in New York.

That would help reduce the pool of existing properties waiting to be sold, and eventually shrink the price gap with newly-built dwellings, he said. The median selling price of a single-family new house rose to $247,000 in March, according to Commerce Department data.

National Association of Realtors figures on Monday showed the median price was $184,300 for an existing home in March, reflecting a decline in the share of distressed properties from a year earlier.

“The faster the draw down of inventories, the closer we’ll get to a more normal housing market,” said Mulraine. As for rising costs, “it’s the growing pains resulting from the beginning of an earnest recovery in housing. It suggests we’re on our way.” Information for this article was contributed by Glen Chase of the Arkansas Democrat-Gazette.

Business, Pages 65 on 04/28/2013