Builders Cite Building Material Prices as Top Challenge

Nearly nine out of 10 builders expect building material prices will be their top challenge in 2021. To show the magnitude of this problem, the 89% builder response is down from the 96% of builders who reported this issue as their top concern in 2020.

Along the same lines, the No. 2 problem builders faced in 2020 was the availability/time it takes to obtain building materials. This issue was cited by 78% of the respondents last year, while 80% of builders report this will be a key concern in 2021. The high incidence of builders reporting building material problems is not surprising given recent increases in material prices.

The builder responses were from a December 2020 survey for the NAHB/Wells Fargo Housing Market Index, where builders were asked about the problems they confronted in 2020 and expect to face in 2021.

Compared to the supply-side problems of materials, labor and lots, concerns regarding federal government policies were not as widespread last year, but builders expect that to change in 2021.

For example, 28% of builders reported federal environmental regulations and policies as a significant problem in 2020 while 48% of builders expect this to be an issue in 2021. In another example, 21% of respondents last year reported that taxes on home builders was a problem while 41% of builders expect this will be a significant issue this year.

NAHB economist Ashok Chaluvadi provides more analysis in this Eye on Housing blog post.