Interest Rates Among Builders’ Highest Concerns for 2024

High interest rates were a significant challenge for 90% of home builders in 2023, and 77% expect that problem to persist this year, according to a January 2024 survey for the National Association of Home Builders/Wells Fargo Housing Market Index.

At 83%, rising inflation in the U.S. economy was builders’ second-biggest challenge last year. In 2024, only 52% expect to face the same problem, making it one of the lowest concerns for the year.

The survey found that builders expect several issues to pose even greater challenges this year than last. These issues include:

• Buyers expect prices or interest rates will decline if they wait (71% in 2023 to 77% in 2024)
• Cost/availability of developed lots (57% to 64%)
• Impact/hook-up/inspection or other fees (50% to 55%)
• Difficulty obtaining zoning/permit approval (49% to 51%)
• Concern about employment/economic situation (48% to 55%)
• Local/state environmental regulations and policies (48% to 52%)

However, while some issues are raising greater concern among builders this year than last, a few others are expected to pose less of a challenge. In addition to high interest rates and rising inflation, these include:

• Cost/availability of labor (73% in 2023 to 71% in 2024)
• Building material prices (63% to 58%)
• Negative media reports making buyers cautious (56% to 54%)

Overall, builders are generally most concerned about problems attracting buyers in 2024, as well as the supply of materials and labor.