Material Costs

Material Costs
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Contacts: Felicia Watson
fwatson@nahb.org
(202) 266-8229

Alex Strong
astrong@nahb.org
(202) 266-8279

David Logan
dlogan@nahb.org
(202) 266-8448

Material Costs Affect Housing Affordability

The rising cost of building materials is harming housing affordability as the cost and limited supplies of softwood lumber, steel, aluminum and other imported materials and equipment exacerbate price volatility and drive up housing costs. The rising supply costs are exacerbated by the uncertainty of when supplies will be available to complete the home in a timely manner and whether or not the homes will appraise at the correct price to reflect these rising costs.

Housing has been an economic bright spot amid the COVID-19 pandemic, but the industry’s potential to lead the economy forward is limited as long as building materials remain expensive and scarce. Builders are doing everything possible to avoid pricing consumers out of homes while still maintaining competitive prices necessary to operate their businesses — especially given the potential long-term impacts on consumers.

Immediate impacts of rising costs include:

  • A downturn in new home starts, as builders struggle to begin projects with uncertain time frames and costs,
  • Construction delays, as the supply of materials remains unpredictable,
  • Home owners walking away from the projects because of escalating projects costs, and
  • Appraisals not reflecting the true value of the home, because costs are rising too rapidly and builders are having to compensate on the frontend of construction by decreasing amenities available in the home. Without proper appraisals, the builder and/or the home buyer are left trying to bridge the gap between what the appraiser says the home is worth and the actual sales price of the home. (To learn more about the different approaches to appraisals, and possible solutions, visit NAHB’s “Understanding Appraisal Approaches” page.)

The Commerce Department should be investigating why supplies from lumber producers and mills, and other materials sources are at such low levels.

Solving the Lumber Crisis
<p>NAHB is leading efforts for the Administration to address the recent sharp increases in lumber prices that threaten the affordability of new homes and the housing sector, which is leading the nation&rsquo;s economic recovery.</p>

Solving the Lumber Crisis

Solving the Lumber Crisis

NAHB is leading efforts for the Administration to address the recent sharp increases in lumber prices that threaten the affordability of new homes and the housing sector, which is leading the nation’s economic recovery.

Learn more
United States-Mexico-Canada Agreement
<p>The implementation of the United States-Mexico-Canada Agreement (USMCA) will help address the housing affordability crisis.</p>

United States-Mexico-Canada Agreement

United States-Mexico-Canada Agreement

The implementation of the United States-Mexico-Canada Agreement (USMCA) will help address the housing affordability crisis.

Learn more
Understanding Appraisals
<p>Appraisers can incorporate three approaches to determine the value of a property: the sales comparison, cost and income methods.</p>

Understanding Appraisal Approaches

Understanding Appraisal Approaches

Appraisers can incorporate three approaches to determine the value of a property: the sales comparison, cost and income methods.

Learn more