A labor shortage and lack of land and ready-to-build materials limited the pace of construction. A new report from the National Association of Realtors (NAR) reveals that the housing market needs to build at least 5.5 million new units, both single-family and multi-family, just to meet demand and maintain home ownership. affordable property over the next decade.
The industry trade group said it hopes the report convinces lawmakers to include housing investment in any infrastructure bill. Without additional housing, industry experts say more Americans are likely to become renters in the years to come.
Jerry Howard, CEO of the National Association of Home Builders (NAHB), told Yahoo Finance Live that builders are having issues with their supply chains.
“It’s clear that builders are having issues with their supply chains, from wood to cabinets to appliances. And that impacts the time it takes to build a house, and the resulting cost increases also impact the builder’s ability to get a loan, ”he said. “What worries me is that this will also eventually become a problem for consumers who also get their loans.”
Homebuilder confidence in the United States fell to 10-month low in May as rising building material costs pushed up home prices, making it harder for some builders to get loans . The National Association of Home Builders’ Wells Fargo Housing Market Index fell two points to 81, from a recent record high of 90. However, anything above 50 is still viewed as positive.
An unprecedented shortage of available-for-sale homes has sparked bidding wars for many properties, pushing prices up. The median price of existing homes in April 2021 was a record $ 341,600 and the (NAR) expects house prices to grow another 8% in 2021 and 5.5% in 2022.
A surge in lumber prices over the past year has added $ 35,872 to the price of an average new single-family home and $ 12,966 to the market value of an average new multi-family, according to the NAHB. Timber prices have started to descend historically high levels, but some industry experts expect lumber prices to remain high for the foreseeable future.
Howard said higher costs and supply shortages have forced home builders to change their business practices, including adding “escalation clauses” to their contracts. “In other words, I think the wood in your house is going to cost X. I think the cabinets are going to cost Y. But they could go all the way to Z and A, and if they do, that clause is in. the contract, ”Howard explained. “Unfortunately, these kinds of clauses sometimes scare consumers, and it becomes a problem.”
Howard said some builders are delaying sales until they know they have all the materials they need to get started and get the job done in a timely manner.
“Another thing that I saw them do, in the South, for example, is to lay the concrete slabs for the housing, and then not to start framing them until they know that the prices of the timber are down, ”he said. a danger to me because it potentially indicates a downturn in the housing industry, and that’s something we want to avoid.
Alexis Christoforous is a presenter at Yahoo Finance. Follow her on Twitter @AlexisTVNews.