Homebuilder confidence unexpectedly jumped in October, despite expensive building materials and acute labor shortages that continue to strain the construction industry. Homebuilders have struggled to meet strong consumer demand that was perpetuated by the COVID-19 pandemic, as the current supply of homes on the market remains historically low. This month, single-family housing authorizations remained relatively unchanged year-over-year, and growth has slowed in recent months. In addition to the supply-side constraints homebuilders have faced this year, it’s possible that the backlog of starts has deterred homebuilders from filing new building permits as they struggle to catch up.
“We anticipate higher inflation from housing to continue into 2022, as strong demand and the persistent housing shortage are putting upward pressure on houses,” said Jonathan Kanarek, managing director of BuildFax, a Verisk business.
Remodeling projects also slowed this month, although project costs remain up year over year. Many remodelers have raised prices for projects due to expensive building material costs and ongoing supply-chain disruptions in the last few months. As such, homeowners are likely refraining from large-scale projects until prices cool.
Download the latest BuildFax Housing Health Report to understand the impact of mounting inflation on housing activity and what’s on the horizon in 2022.