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

By Kelly Leighton | Feb. 23, 2023 | 2 min. read

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.

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