ORLANDO, FL — Low existing-home inventory and strong buyer demand will keep housing moving forward in 2022, even as builders continue to grapple with ongoing building material production bottlenecks and labor shortages that will limit the pace of construction and keep upward pressure on home prices, according to economists speaking at the International Builders’ Show.
“Building material costs are up 21% compared to a year ago,” said National Association of Home Builders Chief Economist Robert Dietz. “Their price and availability, along with persistent supply chain bottlenecks, remains the most urgent challenge for builders as they seek to boost production to meet rising demand.”
Builders are also contending with persistent labor shortages, with the NAHB estimating that the residential construction sector will need to add 740,000 workers per year to keep pace with the industry’s growth, retirements and departures. Higher mortgage rates combined with rising construction costs and a lack of construction workers “will increase affordability headwinds in the year ahead,” Dietz commented.
Boosted by strong multifamily growth, overall housing production is expected to rise 2.5% in 2022, to a 1.63-million-unit annual pace, the Washington, DC-based NAHB said.
The NAHB is anticipating “modest” single-family construction growth in 2022, with single-family starts expected to increase 1.0%, to 1.13 million units, and edge 1% lower in 2023, to a 1.12 million rate. Multifamily starts, fueled by low vacancies and rising rents, are anticipated to rise 6.3% from 2021, to about 496,000 units. Sales of new single-family homes are projected to total 830,000 in 2022, up 9.3% from last year.
Meanwhile, residential remodeling activity is expected to increase 6% in 2022, following a growth rate of 10% in 2021, as people continue to use their home for multiple purposes, including offices, schools and gyms, the NAHB added.