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April 2018

Labor costs, availability and building material prices lead list of biggest concerns builders cite for 2018

By NWREporter

Labor costs and availability plus prices for building materials lead a list of major concerns builders cite as factors for the construction shortfall and items that concern them most. The same concerns topped the list for 2017.

Builders identified 10 significant problems they expect to face in 2018 as part of the National Association of Home Builders and Wells Fargo Housing Market Index.

Since being identified as a concern in 2011 when 13 percent of builders identified it as a significant concern, the cost and availability of labor is now rated as a big concern by 84 percent of respondents.

Equally concerning to NAHB builders are building materials prices.

Rounding out the top five concerns for builders in 2018 are the cost/availability of developed lots (62%), impact/hook-up/inspection or other fees (60%) and inaccurate appraisals (42%).

The remaining concerns for 2018 on the builders' "top 10" list were:

#6. Federal environmental regulations and policies (42%)
#7. Local/state environmental regulations and policies (45%)
#8. Difficulty obtaining zoning/permit approval (42%)
#9. Gridlock/uncertainty in Washington making buyers cautious (42%)
#10. Development standards (parking, setbacks, etc.) (38%)

In releasing the findings of its poll, NAHB said two emerging issues for builders are attempts to limit the mortgage interest deduction and related support for housing, and high interest rates. Nearly half the builders (49 percent) expect the issue around housing tax incentives to be a problem in 2018, up from 31 percent who said it was a problem in 2017. The share who expect high interest rates to be a concern is still relatively low at 18 percent, but up sharply from the 4 percent who said it was a problem last year.

The Housing Market Index (HMI) is based on a monthly survey of NAHB members designed to take the pulse of the single-family housing market.