Homebuilders Still Struggling with Materials, Cite Inflation and Interest Rates as Concerns

Affordable materials remain difficult to find and homebuilders are continuing to feel the struggle.

According to the National Association of Home Builders, 96% of builders in both 2021 and 2022 said building material prices were a top problem facing the industry. In 2022, 86% of builders said both the availability and time it took to get building materials was a problem, down 5% from 2021. However, there was a 3% increase in builders who said both the cost and availability of workers were an issue, reaching 85% for 2022.

Rising inflation saw a 22% jump from 2021 to 2022. In 2021, only 63% of builders considered it an issue, but in 2022, 85% cited it as a problem. High interest rates also saw a rise, only 2% of builders considered it a problem in 2021, compared to 66% in 2022, thanks to mortgage rates that more than doubled. Nearly half of builders in 2022 said buyers were waiting, hoping home prices or interest rates would fall, compared to just 23% of builders in 2021. Eighty percent of builders anticipate this will be an ongoing problem in 2023.

Builders also cited the media’s negative reports on the housing market as a growing problem. Buyers were becoming more cautious, thanks to what they were reading and seeing, said 55% of builders in 2022, compared to just 26% in 2021. Nearly 80% of builders expect this to continue to be a problem in 2023.

Looking into 2023, 93% of builders predict high interest rates to be an issue in this year, compared to just 66% who predicted it would be a problem in 2022. Close to three-quarters of builders said they think buyers will shy away due to concerns about their job or economic situation. More than half (54%) said uncertainty in political environment will delay buyers and 52% said they think buyers will struggle to sell their current home, leaving them unable to move to their next property.