Builders are experiencing labor shortages, and its impacting their business in a number of ways, reports Paul Emrath for NAHB's Eye on Housing. In a July survey for the NAHB/Well Fargo Housing Market Index, builders reported these shortages were causing them to pay higher wages/subcontractor bids (reported by 84% of builders), forcing them to raise home prices (83 percent) and making it difficult to complete projects on time (73%).
These have consistently ranked as the most commonly reported effects of the labor and subcontractor shortages since NAHB began asking builders about them in 2015. However, all three have become even more common recently. The steepest upward trend has been in the share of builders saying the labor/sub 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.
Also included in the surveys are questions about how much labor and subcontractor costs for building the same house have increased over the previous 12 months. The chart below shows the average responses and compares them to overall inflation (measured by the change in the Consumer Price Index over the same 12-month period).Read More