Strategies Builders Employ to Combat Rising Building Material Costs and Shortages

Economics
Published

How have single-family builders reacted to recent shortages and price increases in building materials?

The most common strategies, cited by 62% and 59% of builders, were to raise their prices on their homes frequently and pre-ordering materials, according to a June survey for the NAHB/Wells Fargo Housing Market Index (HMI).

These approaches were followed by price escalation clauses (45%, waiting until late in the construction process before listing spec homes (39%) and cost-plus pricing (32%).

Only 2% of builders indicated they had adopted none of the listed techniques for dealing with the shortages and rising cost of materials.

While some of the most dramatic price increases over the past year involved lumber prices, this has caused very few builders to switch away from traditional wood framing, although some are considering it. In particular, 17% are considering switching to steel, 16% to structural insulated panels, 14% to insulated concrete forms and 8% to concrete masonry.

NAHB Senior Economist Paul Emrath provides more analysis in this Eye on Housing blog post.

Single-family home builders are invited to join the exclusive group of NAHB members who participate in the HMI survey. To begin receiving these monthly surveys, please submit this form.

Subscribe to NAHBNow

Log in or create account to subscribe to notifications of new posts.

Log in to subscribe

Latest from NAHBNow

Advocacy

Oct 31, 2025

NAHB's Monthly Update Features Talking Points on Legislative Priorities

The update provides the latest messaging framework to help members articulate housing priorities and latest news related to the recent legislative proposals and the government shutdown.

Membership

Oct 31, 2025

HBA Staff Appreciation Week Kicks Off

From Nov. 3-7, NAHB will celebrate HBA Staff Appreciation Week, an annual event that recognizes the individuals who serve the more than 650 home builders associations that make up NAHB.

View all

Latest Economic News

Economics

Oct 30, 2025

Which Local Markets Track National Trends the Most: 2024 Single-Family MAI

The National Association of Home Builders developed the Single-Family Market Association Index (MAI) to measure how closely single-family building permits in metro areas follow national patterns. By comparing local and national trends, the MAI helps industry leaders and forecasters better understand and predict housing market activity.

Economics

Oct 29, 2025

The Fed Cuts amid Partly Cloudy Conditions

With the government shutdown limiting the quantity of economic data available to markets and policymakers, the central bank’s Federal Open Market Committee (FOMC) enacted a widely anticipated 25 basis point cut for the short-term federal funds rate.

Economics

Oct 28, 2025

Home Price Growth Slows

Home prices in August grew at the lowest annual rate in over two years, according to the recent release of the S&P Cotality Case-Shiller Home Price Index (seasonally adjusted – SA).