Labor Shortages Remain Top Concern for Builders
The cost and availability of labor continues to stand out as the most significant challenge that builders will face in 2020, according to a recent survey of members that ran in the monthly NAHB/Wells Fargo Housing Market Index (HMI).
More than four out of five builders – 85% – expect to face serious challenges regarding the cost and availability of labor this year, down slightly from the 87% who rated this issue as their top concern in 2019.
Building material prices and the cost and availability of lots were tied as the No. 2 problem expect to face in 2020, with these issues cited by 66% of the survey respondents.
All three of these supply-side issues have been a growing concern for builders over the past several years. To put it into perspective, in 2011, just 13% of builders cited labor issues as an important concern, with the rate steadily rising over the ensuing years before peaking at 87% last year.
Likewise, the cost and availability of lots were reported as a significant problem by 21% of builders in 2011, and the percentage steadily increased over the following years, reaching a high of 66% in 2020.
Meanwhile, building material prices was reported as a significant problem by 33% of builders in 2011. In the ensuing years, builder concerns regarding this issue ranged from 42% in 2015 to a peak of 87% in 2018.
Rounding out the top five concerns for builders in 2020 are impact/hook-up/inspection or other fees (60%) and gridlock/uncertainty in Washington making buyers more cautious (56%).
NAHB economist Ashok Chaluvadi provides more analysis on the labor shortages and the rest of the top 10 list in this Eye on Housing blog post.