If you're ready to move up, you may be debating whether to buy an existing home or build a new one. And, given the current scarcity of properties for sale, you're willing to examine any option. While home builders are doing everything possible to build additional homes and help alleviate the supply constraint, they are also experiencing delays due to causes beyond their control.
Here's the latest on some of the most pressing issues confronting homebuilders today, as well as how they may affect your plans to upgrade. You can make an informed decision about whether to go for a newly built or existing home in your home search if you know what's going on in the business.
The first challenge that builders face is a lack of supply of various building materials. According to a recent article from HousingWire:
“. . . Nearly everything needed in the homebuilding process is facing some sort of delay and subsequent price increase.”
The supply problem isn't limited to lumber, despite the fact that that's what gets the most attention in the media. Many other products, such as roofing materials, windows, garage doors, siding, and gypsum, are also impacted, according to the article (which is used in drywall).
The difficulty in getting these items is dragging out timelines for new homes as builders wait on what they need to finish construction. And since materials are in short supply, even when they do get the product, the principle of supply and demand is driving prices up for those goods. HousingWire explains it like this:
“When supplies are low, charges inevitably go up, . . . Meanwhile, a lack of availability is causing huge delays, meaning builders are struggling to stay on schedule.”
The National Association of Home Builders (NAHB) agrees:
“Builders are grappling with supply-chain issues that are extending construction times and increasing costs.”
But that isn't the only issue with today's new home development. Builders are also having a difficult time recruiting skilled personnel, resulting in a labor shortage that is further delaying their schedules. This is a continuous difficulty for the sector, according to Odeta Kushi, Deputy Chief Economist at First American:
“The skilled labor shortage in the construction industry is not new – it’s been an issue for more than a decade now.”
But there is good news. The February jobs report shows employment gains in the construction industry. Kushi puts this encouraging news into perspective in the article mentioned above:
“Overall this was a good report, . . . The supply of workers continues to fall short of demand, but the underlying momentum of the labor market recovery is strong, and falling COVID case counts provide further forward momentum.”
It means that, while finding workers remains difficult for builders, there are signs of positive momentum moving forward.
HousingWire explains how these things can impact move-up buyers today:
“The residential construction industry is facing a crisis as builders manage the critical shortage of building materials and labor. Explosive supply and labor costs are forcing long delays. . . .”
So, when weighing your options and deciding whether to build a new home or buy an existing one, consider the potential delay in new home construction. While this does not mean you should rule out newly built homes, it does mean you should consider your timeline and whether you are willing to wait while your home is being built.
Understanding the most recent market conditions is critical to making the best decision possible when planning your next move. Let's connect so you have all the information you need. Together, we can ensure that you are aware of what is going on in our local market, allowing you to confidently decide what is best for you, your priorities, and your timeline.
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