With the cost of building materials jumping 25 percent year over year, according to the National Association of Home Builders' NAHB/Wells Fargo Housing Market Index, builders are increasingly concerned about how this will affect home buyers in the new-construction market. In 2016, builders ranked the cost of building materials low on their list of concerns—but now it's one of their top five.
The increased cost of lumber is a chief catalyst. "Negotiations on a new softwood lumber agreement between the United States and Canada ground to a halt at the end of 2016 and likely are stalled pending the results of an investigation into unfair import practices requested by the U.S. Lumber Coalition," the NAHB reports.
Because of this, home buyers likely will face price hikes. According to the NAHB/Wells Fargo Housing Market Index, builders cited the following as the 10 most significant problems they expect to face in 2017:
- Cost/availability of labor: 82%
- Cost/availability of developed lots: 67%
- Impact/hook-up/inspection or other fees: 61%
- Building material prices: 60%
- Federal environmental regulations and policies: 52%
- Local/state environmental regulations and policies: 52%
- Regulation of banking/financial institutions: 48%
- Development standards (parking, setbacks, etc.): 47%
- Inaccurate appraisals: 46%
- Health insurance: 40%
Source: “Material Costs Spike as a Menacing Builder Worry,” BUILDER (Feb. 28, 2017)
