Most of America’s single-family homebuilders are facing trouble securing both building materials and appliances for fitting out their developments, new data from the National Home Builders Association says.
Ninety-four percent of homebuilders in the Northeast said they faced high building materials prices in 2020 and 97 percent expect they will do so again in 2021, according to the December NAHB/Wells Fargo Housing Market Index survey. And 77 percent said materials availability was a problem in 2020 and 87 percent expect it will be a problem this year.
The problem extends even to washers, driers and other appliances some homebuilders provide with homes they construct, the NAHB said in a recent blog post. Special questions added to the end of the February survey found 51 percent of home builders nation-wide said they had significant difficulty obtaining appliances in a timely fashion, and another 38 percent said they had some difficulty. The problem appears to be affecting builders of all sizes, the NAHB said.
Overall, supply chain challenges are adding costs to new home construction, the association said.
“Lumber prices have been steadily rising this year and hit a record high in mid-February, adding thousands of dollars to the cost of a new home and causing some builders to abruptly halt projects at a time when inventories are already at all-time lows,” NAHB Chairman Chuck Fowke, a custom home builder from Tampa, Florida, said in a statement. “Builders remain very focused on regulatory and other policy issues that could price out households seeking new homes in a tight market this year.”
Still, buyer demand remains strong and has helped buffer the effects of some of these price increases, NAHB Chief Economist Robert Dietz said in a statement.
“Demand conditions remain solid due to demographics, low mortgage rates and the suburban shift to lower cost markets, but we expect to see some cooling in growth rates for residential construction in 2021 due to cost factors, supply chain issues and regulatory risks,” Dietz said. “Some builders are at capacity and may not be able to expand production due to these headwinds.”
As prices rise, appraisers may become more willing to agree that a home’s higher price has merit. The NAHB December survey also found just under half of builders in the Northeast faced inaccurate appraisals when trying to sell their homes, but only 39 percent expected that to be the case in 2021.