Labor shortages and a rise in the cost of building materials have been hard on homeowners, homebuilders, and contractors. The cost of doing any type of building project has increased exponentially since the pandemic began in early 2020. The reason for these rising prices and for the current labor shortage is quite complex.
Increased Need for Single-Family Housing
Driven by the coronavirus pandemic, there’s been an increase in need for single-family housing, and with interest rates down, the demand for new construction homes has gone up. During the shutdowns, many families found more time for DIY and renovation projects, like replacing roofs, which has also increased the demand for building materials.
Demand Outpaced Production
The demand of building materials was unexpected, so 2020 production could not meet the need. With new construction homes and remodeling projects down in 2019, the expectation was that 2020 would be similar. Instead, the demand was completely unexpected, and the pandemic made it even harder than usual to maintain production, let alone play catch-up. When supply can’t meet demand, the cost of materials rises.
In some situations, like new construction builds, material costs are up so high that buyers would not be able to afford them. Some contractors are eating some of that excess cost, which cuts into their profitability and margins. In other situations, homeowners are having to be more creative and reimagine their DIY and remodeling plans as they work with the rising cost of the materials they need.
Labor Shortages Add to the Problem
Currently, there are still millions of Americans remaining unemployed and many business owners are reporting labor shortages. Now that the economy is reopening on a larger scale, more Americans will hopefully be reentering the workforce. However, as they do, some are desiring higher wages to return to work, and that’s added another complexity to builders and those who work in construction.
Labor shortages and a difficult time with producing enough building materials to meet the demand for them has caused higher costs in the construction community. We hope to see these costs come down to a more average level this year.