Builders Say Lumber Costs Keeping Buyers Away

Builders are weighing in on construction costs' impact on homebuying. Over 40 percent of builders said the costs are stopping keeping buyers from purchasing new homes.

Over the past year and a half, lumber prices have steadily increased due to tariffs put on the material, and 95 percent of builders surveyed say that the rising costs have an adverse effect on affordability. Yet, these builders were split down the middle on whether or not the impact was big or small. Interestingly, only 7 percent of builders surveyed by the National Association of Home Builders say that student debt is the reason why homebuyers are holding back from purchasing a new home.

The new results reported in this post come from special questions on the April 2018 survey for the NAHB/Wells Fargo Housing Market Index (HMI). One of these questions asked single-family builders in the HMI panel why their prospective customers are holding back from buying a new home—if, in fact, that is what they are doing. A substantial share (21 percent) said that the question didn’t apply, because their buyers are not holding back at the moment. But the top answer, checked by 43 percent of the builders, was that buyers are holding back right now because they are unwilling to cover current construction costs.

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