New home construction is up! In March 2022, about 1.6 million homes were under construction — the highest it’s been since 1973.
Sounds like good news for the housing market right? More homes under construction means more houses on the market which should help ease the massive housing shortage… sounds simple enough.
Sadly it’s not that simple.
The global supply chain issues have exacerbated the housing shortage in ways no one could’ve ever anticipated. It’s made numbers that are usually a good sign — like the number of homes under construction — become indicators of a larger problem that may not be resolved anytime soon.
- So how are the supply chain issues affecting new home construction?
- What does this mean for home builders and other housing professionals like you?
- And is there any end in sight?
Find out in this 5-minute read.
Back Orders Leaving Construction Projects Pending
So how have supply chain issues affected new home construction?
You might think that since more homes are “under construction” supply chain issues aren’t affecting builders that much. If builders are building, they have supplies, right?
Keep in mind that “under construction” doesn’t necessarily mean builders are actively working on those homes. Really, a better term to use right now instead of “under construction” is “unfinished”.
Yes, there is currently a record number of unfinished homes. Doesn’t sound as positive now does it?
How has the supply chain disruption contributed to this?
Basically, thousands of homes remain unfinished as builders are waiting on back-ordered supplies.
Maybe it’s a garage door, windows, plumbing fixtures, or HVAC equipment. Either way, if you don’t have key supplies to finish the home, there it sits — unoccupied, unfinished, and technically still “under construction”. You’ve probably experienced this first-hand.
So how long will this keep going? When will builders get the supplies they need to move the projects from pending to completed and ease the housing shortage?
How is this affecting the Housing Market?
The current housing shortage has made this a seller’s market. Sellers hold the power and buyers are forced to compete with each other for whatever homes are on the market, regardless of the prices sellers are asking.
Combine that with mortgage rates that have increased to over 5% ( the highest in a decade ) and buying a home has gotten more expensive than ever.
In some ways, that could help ease the shortage since the rising prices will likely cause many buyers to hold off on buying a home for now. However, it’ll take some time to see how this affects the market.
Hopefully, in the second half of 2022, the market will find a better balance between buyers and sellers. That could happen if:
- Supply chain issues ease and builders finish homes currently under construction.
- Buyers reevaluate their budgets and decide to hold off on buying a home.
- Fewer supply chain issues mean home builders can take on a higher volume of new construction projects which will continue to ease the shortage and bring balance to the buyer/seller relationship.
Supply chain issues holding up your new construction projects? You’re not alone. Thousands of builders, realtors, and housing professionals are in the same boat.
The best thing for you to do now while waiting for things to improve is to be adaptable, plan ahead and get ready to move forward with your projects in the near future.
A great way to do that is with Cedreo and the CostCertified integration.
- Design new homes in as little as 2 hours
- Make changes to the designs on the fly
- Create flexible estimates based on available supplies