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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. 

About Author: Kyle G. Horst

Kyle Horst
Kyle G. Horst is a reporter for DS News and MReport. 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. 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 [email protected].

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