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New Home Buyers May Need to be Flexible as Builders Face Supply Chain Issues

New Home Buyers May Need to be Flexible as Builders Face Supply Chain Issues

Demand for new homes is higher than has been seen in the past 10 years. Between January of 2012 and June of 2021 12.3 trillion American households were formed, however only 7 million new single-family homes were built during that time. And single-family home construction is running at its slowest pace since 1995.

 

To look at the numbers, we saw the single-family construction rise 6.3% in June over May easing some concerns about the housing market and economy. But in July new single-family construction fell by 4.5% from June’s totals and overall construction of new homes, including the multifamily sector, declined 7% in July.

 

The National Association of Home Builders sites labor shortages, building costs, and supply chain issues as the leading causes of the slow down. Number of new permits were down due to costs and many of the projects that began earlier in the year were forced to pause due to availability of materials.

 

What has this meant for new home buyers? Many buyers are paying top price for new home builds. In addition, they may have to sacrifice some of their upgraded amenities to move into their homes. In order to move buyers in one builder I work with had to install temporary appliances with promises that these will be replaced with the higher end models once they are available. Another builder had to take out a fireplace frame and replace it with a solid wall because the fireplace parts were unavailable.

 

The problem especially with appliances stems from chips shortages. As the pandemic unfolded some tech firms stockpiled chips leaving others struggling to acquire components. Plant shutdowns due to weather in Texas and a fire in Japan also caused delays. Costs of shipping and ability to move product complicated the problem. Chip makers are reportedly responding by increasing capacity but this takes time and industry experts doubt it will be solved before Black Friday of 2022.

 

Most recent news on the home front is that new construction starts have held steady through the fall indicating easing labor and supply chain problems. Builder confidence increased in October with the number of new single-family homes in the construction pipeline at 712,000 up 31% over last year.

 

And just last week, President Joe Biden announced that the two largest ports in the U.S. have committed to 24/7 operation to alleviate the supply chain bottleneck. Major shippers and retailers like FedEx, UPS, Walmart, Target, and The Home Depot are also committing to late night operations to move materials and products.

 

Once these new homes hit the market, those looking for new homes should have more choices and hopefully see prices and competition ease a bit. Even then, buyers may need to be flexible with options and amenities in their homes.

 

I work with a number of builders, so if you’re looking for a new home, contact me. I can help you get the house you’re looking for.

 

Catherine Bassick Fine Homes and Estates

Senior Global Real Estate Advisor

http://catherinebassick.com

Brokered by EXP Realty

617.800.7764

MA LIC# 9558155

CA DRE# 01380305

 

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