If you’re thinking of making a move in the near future, you may be trying to determine whether it’s better to buy a home that’s already on the market or try building a new one. Since the current supply of homes available for sale in the real estate market is low, it’s beneficial to consider either option. While construction workers are doing everything in their power to construct more homes and help decrease the supply shortage, they’re also experiencing many shortcomings and delays due to factors outside of their control.
Here are the latest challenges and issues homebuilders are experiencing today and how they could affect your future plans to move up. Knowing what’s happening in the industry is important so you can make an informed decisions on whether to go with a newly constructed home or an existing home.
Supply Chain Problems
The first obstacle builders are facing with is the lack of supply of different 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 shortage isn’t just with lumber, despite that being what’s reported on most in the news. The article explains how there are many other supplies that are being effected too, including roofing materials, windows, garage doors, siding, and more.
The problem in getting these supplies is extending out timelines for new homes as contractors must wait on what they need to finish the building process. And since many of these materials are in short supply, even when they receive the materials, the principle of supply and demand is increasing up for those materials. HousingWire explains it in the following way:
“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 and says:
“Builders are grappling with supply-chain issues that are extending construction times and increasing costs.”
Skilled Labor Shortage
But that’s not the only issue with new home construction right now. Contractors are also having a hard time acquiring skilled labor, which means they’re left short-handed, further extended out the time to finish their projects. Deputy Chief Economist at First American, Odeta Kushi, says this is an pertinent challenge for the industry:
“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 a light at the end of the tunnel. The February jobs report shows employment increases in the construction field. Kushi puts this encouraging news into light 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.”
Despite the challenge of finding skilled workers, there are signs of positive momentum ahead.
How This Impacts Buyers
HousingWire explains how all these different issues can affect 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. . . .”
Therefore, when you look at your options and try to choose between building a new home or buying an existing one, make sure you think about the potential delays you could experience when constructing a new home. This doesn’t mean that you should avoid newly built homes altogether, but it does mean you should spend some time thinking about your timeline and if a delays are something you are willing to deal with.
When it comes time to plan your next move, spend some time speaking with you local real estate agent to understand the latest market conditions. That way, you can make the best decision possible.
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