Materials, Labor Struggles Continuing to Raise Home Construction Costs

Supply and labor shortages continue to plague the construction industry, leading to longer delays in homebuilding, as well as a costlier end product.

Just like in 2021, the majority of builders cited building material prices and the time to get the materials as top concerns in 2022. According to the National Association of Home Builders, 91% of builders expect supply prices to be a problem again this year and 90% expect the timing of supplies to be an issue. Builders anticipate labor to be an even larger issue in 2022, 82% said the cost and availability of labor was an issue in 2021 and 85% expect it to continue this year.

Rising inflation has been a hot topic for all industries, but the construction industry is especially concerned. Nine out of 10 builders expect it to be an issue this year, compared to just 63% who said it was an issue in 2021. The availability and cost of developed lots is another factor builders expect to face in 2022, 61% of builders anticipate it will be a problem, compared to just 49% who said it was an issue in 2021. Across all issues builders reported facing in 2021, more builders expect them to be a problem in 2022, compared to 2021.

NAHB also reported that only 54.2% of new and existing homes sold in the last quarter of 2021 were affordable to a family earning the median income ($79,900). For the most part, the percentage of affordable homes has declined steadily since the beginning of the pandemic. Both the Scranton-Wilkes-Barre-Hazleton area, as well as Pittsburgh, were in the top 10 of cities having more affordable housing. In the Scranton-Wilkes-Barre-Hazleton area, 88.5% of homes on the market were affordable for the median income, while in Pittsburgh, it was 88.4%.