Top Challenges for Builders in 2024
According to the January 2024 survey for the NAHB/Wells Fargo Housing Market Index (HMI), high interest rates were a significant issue for 90% of builders in 2023, and 77% expect them to be a problem in 2024. The second most widespread problem in 2023 was rising inflation, cited by 83% of builders, with 52% expecting it to be a problem in 2024.
Concerns over the cost and availability of labor have increased significantly in recent years, rising from only 13% of builders in 2011 to its peak at 87% in 2019. Fewer builders reported this problem in 2020 (65%), but the share rose again in 2021 (82%) and 2022 (85%). The share eased slightly in 2023 to 74%, and 75% expect the cost and availability of labor to remain a significant issue in 2024.
The share of builders experiencing significant problems with building materials prices has fluctuated over the years as well, reaching as low as 33% in 2011 to a peak of 96% in 2020, 2021 and 2022. The slowdown in single-family construction in 2023 made this less of a problem for builders last year, with 63% reporting it as a significant issue. Fewer (58%) expect it to remain an issue in 2024.
Compared to the supply-side problems of materials and labor, problems attracting buyers have not been as widespread, but builders expect many of them to become more of a problem in 2024. Buyers expecting prices or interest rates to decline if they wait was a significant problem for 71% of builders in 2023, with 77% expecting it to be an issue in 2024. A majority of builders (56%) also cited negative media reports making buyers cautious as a significant issue that is expected to continue in 2024.
NAHB Senior Economist Ashok Chaluvadi provides more details in this Eye on the Economy post, as well as a download to the full survey report.
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