Labor Shortages Push Up Construction Costs

Builders are being forced to raise home prices and are having a more difficult time meeting project deadlines because of the ongoing labor shortage in the construction industry, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index. Eighty-four percent of builders say they have had to pay higher wages to subcontractor bids, 83 percent say they have had to raise home prices, and 73 percent say they can’t complete projects on time without more manpower. The number of builders reporting labor and subcontractor shortages reached a record high in July.

“The steepest upward trend has been in the share of builders saying the labor/subcontractor shortages are causing higher home prices, which increased by 22 percentage points between 2015 and 2018—to the point where it is now nearly tied with higher wages/sub bids as the most widespread effect of the shortages,” NAHB reports on its Eye on Housing blog. The survey also shows other effects of the labor shortage, such as builders saying that, in some cases, they’ve been forced to turn down projects.

Source: “Housing Market Index (HMI),” National Association of Home Builders/Eye on Housing (September 2018)

Recently Released: ‘Most Popular New-Home Features’ from NAHB

Convenience, livability, and energy efficiency are top priorities in the construction of new homes this year, according to the National Association of Home Builders, which recently released the most popular features in new single-family homes in 2014. Builders nationwide were surveyed to find out what features they were most likely to include a single-family home this year.

Among the features that are most likely to be included in a typical single-family home are:

  • A walk-in closet in the master bedroom
  • “Low-e” windows
  • A laundry room
  • A great room

Also, builders report more attention to energy efficiency in the construction of new homes. For example, Energy-Star rated appliances, programmable thermostats, and Energy-Star rated windows also were among the top of the list for features most likely to be included.

“These features help make the home more comfortable and can save the home owner significant money over the long term,” according to NAHB. On a median per-square-foot basis, home owners spent 78 cents per square foot per year on electricity, while owners of new homes spent 65 cents per square foot per year, according to data from the 2009 American Housing Survey.

Source: National Association of Home Builders.