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

Sponsored Content
Sep 18, 2026
Why Growth Breaks Builders Who Aren't Ready for It

Financing should be a strategic growth tool, not a substitute for a sound business. The right capital, aligned with the right projects and deployed at the right time, helps builders move when opportunity arrives.

Material Costs
Sep 17, 2026
House Bill Seeks Tariff Relief for Building Materials

NAHB worked with Rep. Nanette Barragán (D-Calif.) on legislation aimed at lowering housing costs by establishing a tariff exemption process for building materials. The Housing Tariff Exclusion Act (H.R. 10416) would automatically exempt many home building materials from President Trump’s current and future tariffs and give importers a process to seek exemptions for additional materials.

View all

Latest Economic News

Economics
Sep 17, 2026
Single-Family Starts Rebound but Market Challenges Persist

Single-family housing starts rebounded in August, but production remains down 4.7% year to date as builders contend with rising construction costs, lot and labor shortages, and economic uncertainty.

Economics
Sep 16, 2026
With Inflation Uptick, Fed Hikes and Signals More to Come

The Federal Reserve raised the federal funds rate by 25 basis points at the conclusion of its September policy meeting, bringing the target range to 3.75% to 4%.

Economics
Sep 16, 2026
Builder Sentiment Falls on Higher Interest Rates and Costs

Higher mortgage rates, worsening labor shortages and rising material costs are weighing on builder sentiment.