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.
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. To learn more about the different approaches to appraisals, and possible solutions, visit Understanding Appraisal Approaches.
The trade war on lumber, steel, aluminum and other imported materials is needlessly pushing up housing costs. NAHB urges Congress to call on the administration to return to the table and negotiate a new softwood lumber agreement with Canada and to resolve the trade dispute with China. Learn more at the links below.