Page 18 - Builder Brief March 2023 Issue

ECONOMY
MATERIALS REMAIN TOP CHALLENGE FOR
BUILDERS
But New Issues Are Becoming Increasingly Problematic
Originally Published on NAHBNow.com
The price and availability of building materials again topped the list of problems builders faced last year, but interest rates, general inflation and negative media moved considerably up the list.
According to responses on the January 2023 survey for the NAHB/Wells Fargo Housing Market Index (HMI), building material prices were the most significant issue for builders in 2022 (cited by 96 percent of builders), followed by availability and timing to obtain building materials (cited by 86 percent of builders). Both problems topped the list in 2021 as well.
Cost and availability of labor has also been a relatively widespread problem, reported as a significant issue by 82 percent of builders in 2021 and 85 percent in 2022 — which is not surprising, given the large number of unfilled job openings in the construction industry.
However, some problems became significantly more widespread in 2022. High interest rates were a problem for only 2 percent of builders in 2021 but affected 66 percent of builders in 2022. Rising inflation in the U.S. economy was a significant problem for 85 percent of builders in 2022, compared to 63 percent in 2021. And negative media reports making buyers cautious also affected 55 percent of builders in 2022, compared to 26 percent in 2021.
More builders (93 percent) expect high interest rates to be a problem in 2023, up strongly from the 66 percent who said it was a problem in 2022. Moreover, both the current and expected numbers were much higher in the recent survey than at any time between 2011 and 2021.
Compared to the supply-side problems of materials and labor, problems attracting buyers have not been as widespread, but builders expect many of them to become more of a problem in 2023. Negative media reports making buyers caution was a significant problem for 55 percent of builders in 2022, but 79 percent expect them to be a problem in 2023. Buyers expecting prices or interest rates to decline if they wait was a significant problem for 49 percent of builders in 2022, compared to 80 percent who expected it to be an issue in 2023. Concern about employment/economic situation was a problem for only 41 percent of builders in 2022, but 73 percentexpect it to be a problem in 2023. Gridlock/
uncertainty in Washington making buyers cautious was a significant problem for 38 percent of builders in 2022, compared to 54 percent who expected it to be a problem in 2023. Finally, buyers unable to sell their existing homes was a significant problem for only 13 percent of builders in 2022, but 52 percent expect it to be a problem in 2023.
For additional details, including a complete history for each reported and expected problem listed in the survey, please consult the full HMI January2023 Special Survey Report at https://eyeonhousing.org/ wp-content/uploads/2023/02/HMI-January2023- Special-Survey-REPORT.pdf.
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Share of Builders Expecting Problems with High Interest Rates
93%
18 MARCH 2023 | GREATER SAN ANTONIO BUILDERS ASSOCIATION