Top Challenges for Builders: Materials in 2018, Labor in 2019

Building material prices topped the list of problems builders faced in 2018, but cost and availability of labor is expected to return to the number one spot in 2019, according to special questions on the January survey for the NAHB/Wells Fargo Housing Market Index. The survey results showed that material prices were a significant issue for 87% of builders last year. In 2019, however, “only” 69% of the builders expect them to continue being a problem.  The second most widespread problem in 2018 was cost/availability of Labor cited by 82% of builders  Unlike building materials, the share of builders expecting cost and availability of labor to be a problem this year is the same as share reporting it a problem last year, making labor shortages the most widespread challenge builders expect to face in 2019.

 

In 2011, building materials prices was reported as a significant problem by 33% of builders. The share increased to 46% in 2012, 68% in 2013, 58% in 2014, 42% in 2015, 48% in 2016 and 77% in 2017, before peaking at 87% in 2018. Meanwhile, only 13% of builders reported labor as a significant problem in 2011, followed by 30% in 2012, 53% in 2013, 61% in 2014, 71% in 2015, 78% in 2016 and 82% in both 2017 and 2018.

Compared to the supply-side problems of materials, labor and lots, problems attracting buyers were not as widespread last year, but builders expect many of them to become more of a problem in 2019. Negative media reports making buyers caution was a significant problem for 48% of builders in 2018, but 62% expect it to be a problem in 2019. Gridlock/uncertainty in Washington making buyers cautious was a significant problem for 45% of builders in 2018, compared to 53% who expected it to be an issue in 2019. Concern about employment/economic situation was a problem for only 28% of builders in 2018, but 46% expect it to be a problem in 2019.

 

Another problem that seems to be emerging is high interest rates. The 56% of builders who expect high interest rates to be a problem in 2019 is up strongly from the 27% who said it was a problem in 2018, and both numbers were much higher in 2019 than at any time in the 2011-2017 span.

For additional details, including a complete history for each reported and expected problem listed in the survey, please consult the full survey report.



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