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Top 10 Home Builder Concerns

February 15, 2022



Economists have been calling for increased home building to respond to buyer demand as some markets see a record low number of listings. But home builders say headwinds in construction are in the way of adding to the scarce inventory.


Having been the biggest hurdles in 2021, surging prices of building materials and their low availability will likely burden this year as well. Delays in obtaining those materials are also slowing timelines, according to builders recently surveyed in the National Association of Home Builders/Wells Fargo Housing Market Index.



In 2011, building materials prices was reported as a significant problem by 33% of builders, followed by 46% in 2012, 68% in 2013, 58% in 2014, 42% in 2015, 48% in 2016, and 77% in 2017, 87% in 2018, and 66% in 2019 before peaking at 96% in both 2020 and 2021.


Builders also expect these problems to worsen over the next year, according to the NAHB/Wells Fargo Housing Market Index:

  • Rising inflation in the economy

  • Federal environmental regulations and policies

  • Gridlock/uncertainty in Washington that could make buyers cautious

  • Concern about employment/economic situation

Building Materials Remain Top Challenge for Builders


Meanwhile, the cost and availability of labor were reported as a significant problem by only 13% of builders in 2011. The share increased to 30% in 2012, 53% in 2013, 61% in 2014, 71% in 2015, 78% in 2016, 82% in both 2017 and 2018, 87% in 2019 and 65% in 2020. While 82% said it was a problem in 2021, 85% expect it to continue being a problem in 2022. Again, this result is not surprising given a large number of unfilled job openings in the construction industry.


Compared to 2021 builders expect some of the problems to become worse in 2022. Rising inflation in US economy was a significant problem for builders in 2021 and 2022. While the share was 63% in 2021, it is expected to increase significantly to 90% in 2022. Federal environmental regulations and policies were a significant problem for 37% of builders in 2021, compared to 52% who expected it to be an issue in 2022.


Gridlock/uncertainty in Washington making buyers cautious was a significant problem for 32% of builders in 2021, but 50% expect it to be a problem in 2022. Concern about employment/economic situation was a problem for 24% of builders in 2021, but 46% expect it to be a problem in 2022. While Taxes on home builders was a problem for 23% of builders in 2021, it will be a significant problem in 2022 for 43% of builders.

High interest rates were a problem for only 2% of builders in 2021, but 31% of builders expect it to be a significant problem in 2022. Attempts to limit mortgage interest deduction/other was a problem for 12% of builders in 2021, but 30% expect it to be a problem in 2022.





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