Amid declining prices of some building materials, such as lumber, since their early 2021 peaks, other materials costs remain at record highs. Steel, paint, fixtures, and appliances top the list. As a result, economists believe exorbitant prices will persist.
“Nowadays, we literally could be sitting waiting 30 days, maybe even 60, for one thing, or another,” Los Angeles-based construction CEO Mike Sivage told The Daily Reporter. “I’ve been doing this since 1986, and I have to say, I’ve never seen anything like this before.”
The chief economist at the National Association of Home Builders, Robert Dietz, expects high prices to continue. “There are ongoing challenges—and in some cases growing challenges—with flooring and other kinds of building materials.”
Indicators reveal rising interest rates to combat increasing inflation, which jumped 8.3% in the last 12 months (consumer prices rose 5.3%) at the producer level. But even if the Federal Reserve raises interest rates, some expect an ongoing housing boom.
According to the NAHB, as many as 85% of housing contractors intentionally limit their sales due to labor shortages, decreased access to materials, and land to build new homes. The Commerce Department reported an 18.4% increase in the median price of new homes to an all-time high of $390,500.
With upheaval in the construction industry due to labor shortages, increased material costs, and available land, economists predict continued high prices for new homes for the foreseeable future.