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Amid intense homebuyer demand and a strong interest in newly constructed homes, single-family builders have slowed production by 13% in April compared to March. This is the most dramatic drop since the pandemic began, says CNBC. Bleakly Advisory Group’s chief investment officer says building material availability, cost, and labor issues are most likely to blame. Many home builders are slowing production in order to handle the high costs for lumber, steel, gypsum, and copper. Cost for construction materials are up 12.4% compared to the previous 12 months, according to the National Association of Home Builders.
The industry is also dealing with a shortage of labor. Construction employment stalled in April and fell below it’s pre-pandemic peak, according to the Bureau of Labor Statistics.
“Contractors are experiencing unprecedented intensity and range of cost increases, supply-chain disruptions, and worker shortages that have kept firms from increasing their workforces,” said Ken Simonson, chief economist with Associated General Contractors of America, an industry trade group. “These challenges will make it difficult for contractors to rebound as the pandemic appears to wane.”
Roughly 15% of builders said they are putting down concrete foundations and then holding off on framing the house. This counts officially as a “start” according to the Census monthly figures, but it doesn’t create a house.
