Supply-chain woes slow new-home construction, raise prices to record high
Prices of new homes hit all-time high of $416,900 as builders struggle to complete construction
It takes a lot of moving parts to get a house constructed, and right now, a lot of those parts just aren’t moving.
The Wall Street Journal is reporting supply-chain backlogs are causing massive delays in new home construction across the country and sending prices soaring to record levels, even as some buyers move into unfinished abodes, or having to decide on the style of brick to be used numerous times until one that is available is found.
In fact, garage doors became so scarce in Sacramento, California late last year that government officials there began allowing builders to close on homes with temporary enclosure covers.
Meanwhile, price increases caused by the inflation and the delays has raised the cost of a newly built home to a record $416,900 in November — up almost 19 percent from a year earlier according to the publication — and builders fear they may be pricing potential owners out of the market.
According to housing market research firm Zonda, 90 percent of home builders surveyed in November said supply disruption were affecting them, which caused a ripple effect of rescheduling crews already decimated by a shortage of skilled workers.
To make up for the delays, builders have scrambled to locate new suppliers, used substitute materials, stocked up on needed supplies, and even headed to their local Lowes or Home Depot to find things they couldn’t get through normal means.
“From one week to the next, the only thing we know is that we’re going to get notified of something else that is unavailable,” Stew Walker, vice-president of builder Epcon Communities in Dublin, Ohio told the newspaper.
Builders have also begun selling homes later in the construction process, so they don’t undercut themselves on price when costs can change in short periods of time, and are offering fewer options and limiting floor designs, according to the publication.
Delays in closing dates can then affect buyers, who may be locked in to a low rate that expires — then rises — by the time the home is move-in ready.
[Wall Street Journal] — Vince DiMiceli