Shortages of materials are now more widespread than at any at any time since NAHB began tracking the issue on a regular basis in the 1990s in is survey for the NAHB/Wells Fargo Housing Market Index (HMI). In response to special questions on the May 2021 HMI survey, over 90 percent of builders who buy the product in question reported shortages of appliances, framing lumber and OSB. Exactly 90 percent said there was a shortage of plywood, and nearly that many (87 percent) said there was a shortage of windows and doors.
The shortages are not only extremely widespread, but extremely broad-based. Of the two dozen items listed in the May 2021 survey, twelve were checked as being in short supply by at least 70 percent of the builders. In total, 16 were checked as in short supply by over 60 percent, and 21 were checked as in short supply by over 50 percent. All two dozen were flagged as in short supply by at least 43 percent of the builders who purchase the item. In contrast, when the HMI survey last covered the topic in June of 2020, fewer than 40 percent of builders reported a shortage of any of the listed products and materials.
To further illustrate how drastically the situation has changed since last year, the table below compares results from the last two HMI surveys on building materials. Of the 24 building materials and products listed on the May 2021 survey, 23 were also covered in June of 2020. In the eleven months between surveys, the share of builders reporting shortages increased by at least 27 percentage points on all 23 items, usually by much more. In the most extreme case, the share of builders reporting a shortage of OSB skyrocketed by 83 points, from 9 to 92 percent. The shortage percentages for plywood, framing lumber and copper wiring also jumped by 70 points or more.
The one item listed in 2021 but not in 2020 was appliances. Historically, builders have not often complained about appliance shortages, but NAHB added the item to the latest iteration of the survey after fielding a volley of anecdotal complaints earlier this year. The addition turned out to be more than justified. As shown above, 95 percent of builders reported a shortage of appliances in May of 2021—the single highest shortage percentage recorded on any item since NAHB began collecting the information in a systematic way in the 1990s.
The graph below gives a picture of the unique and extreme nature of the current problem from a longer-term perspective, plotting the history of the shortage percentage for each of the six items NAHB has covered in a consistent way since the late 1990s.
As the graph shows, in 2000 builders experienced a shortage of clay brick that was slightly more widespread than the current brick shortage. Also in 2000, there was a shortage of gypsum wallboard that was almost as widespread as it is at present. The shortage percentages for the other four materials in the chart, however, reached all-time high points in 2021, usually by a wide margin. Consider framing lumber, for example. In 2018, 31 percent of builders reported a shortage of framing lumber. At the time, that was a record shortage of framing lumber that seemed quite severe. However, the current 94 percent of builders reporting a shortage of framing lumber is over three times that previous record. The simultaneous spike in shortages for all six building materials in 2021 is unprecedented.
Coming next week: implication of the shortages for the price of a new home.
is the shortage in the united states?
All of the builders responding to the survey are U.S. builders, and are reporting on shortages they see from their vantage point in the U.S.
Is there an answer as to when this may end?
The table does not mention engineered wood products such as siding, lvl’s, i-joists, etc. Is there no shortage of these products?
The categories in the survey are based on historical precedent, and engineered wood products have never been listed as a separate item. The questionnaire started with a handful of categories in the 1990s, and items were added one or two at a time as various stakeholders recommended them. Space on the questionnaire is limited, but we will consider adding engineered wood products as a separate category next time.
What is the reason for these shortages?
It would be reasonable to theorize that with the drastic slow down in the economy last year, inventories were allowed to be depleted resulting in fewer orders. Every step in the supply chain laid off, leaned out or shut down completely. Now as if a switch was flipped, demand returned almost instantaneously. Coupled with the lower inventories, reduced labor force and fewer companies to respond, we have a shortfall between supply and demand. Market forces ie competition for scarce resources results in higher prices. To set the price at the current market value is not necessarily greed.
In the Richmond, VA market, it goes back to under-building since 2010. Because of the great recession, many builders were stuck holding land positions and spec homes they were unable to sell or they sold without a profit. We also lost companies such as Roper Lumber. Some builders went under as well or they were not able to obtain financing to purchase land or build homes during that time. We have less than a 2 week supply of home inventory in the entire Richmond Metro.
Can you tell me the time frame you are seeing for windows to come in for new construction?
We started with 3 weeks. Then it was 7 weeks, then 11, and then 14. All of these changes happened over a 6 week period.
Ok Thanks! Last question. Our new construction home is up and they have put in the plumbing , electric and the venting. They said the windows are behind and won’t be in until the beginning of August. They told us that the estimated close date would be at the end of September. Do you think that is still doable if the windows aren’t in until the beginning of August?
You may already have your answer but it depends on the build type and the location of the but in my neck of the woods, I would say that you will have a delay in completion. Hopefully, your builder has provided an update since this post.
There is great information in this article