Top Challenges for Builders

According to the annual builders survey conducted by the National Association of Home Builders and Wells Fargo, high interest rates were again a significant factor for new home builders looking into 2024—though that number is down from 90% to 77% as rates have moderated and the Federal Reserve has ceased raising interest rates and is signaling a reduction in rates, possibly at a future meeting sometime this year. 

The second most widespread problem in 2023 was economic inflation as 83% of new home builders cited it as a major issue, a number which has come down to 52% this year. 

Other factors that played a part in the survey are: 

  • Cost/Availability of labor: 73% in 2023 to 71% in 2024 
  • Buyers expect prices or interest rates will decline if they wait: 71% to 77% 
  • Building Material Problems: 63% to 58% 
  • Cost/availability of developed lots: 57% to 64% 
  • Negative media reports making homebuyers cautious: 56% to 54% 
  • Impact/hook-up/inspection fees: 50% to 55% 
  • Difficulty obtaining zoning and permit approvals: 49% to 51% 
  • Concern about employment/economic situations:48% to 55% 
  • Local/state environmental regulations and policies: 48% to 52% 
  • Buyers expecting prices or interest rates will decline if they wait: 71% to 77% 
  • Gridlock/political instability in Washington making buyers cautious: 42% to 54% 
  • Buyers unable to sell existing homes: 26% to 25% 
  • Potential buyers putting off purchases due to student debt: 8% to 11% 
  • Competition from distressed sales/foreclosures: 5% to 11% 

The cost and availability of labor was a significant problem to only 13% of builders in 2011. That share has increased significantly over the years, peaking at 87% in 2019. Fewer builders reported this problem in 2020 (65%), but the share rose again in 2021 (82%) and 2022 (85%). The share eased slightly in 2023 to 74%. A similar 75% expect the cost and availability of labor to remain a significant issue in 2024. 

In 2011, building materials prices was a significant problem to 33% of builders. The share has fluctuated over the years, from a low of 42% in 2015 to a peak of 96% in 2020, 2021, and 2022. The slowdown in single-family construction in 2023 made this less of a problem for builders last year, as ‘only’ 63% reported it as a significant issue.  Fewer expect it to face it in 2024 (58%). 

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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Kyle G. Horst

Kyle G. Horst

Kyle G. Horst is a reporter for MortgagePoint. A graduate of the University of Texas at Tyler, he has worked for a number of daily, weekly, and monthly publications in South Dakota and Texas. With more than 10 years of experience in community journalism, he has won a number of state, national, and international awards for his writing and photography including best newspaper design by the Associated Press Managing Editors Group and the international iPhone photographer of the year by the iPhone Photography Awards. He most recently worked as editor of Community Impact Newspaper covering a number of Dallas-Ft. Worth communities on a hyperlocal level. Contact Kyle G. at kyle.horst@thefivestar.com.
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