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Various Shortages Hampered Homebuilding Last Month

According to a new report from the Commerce Department, material, labor, and various building shortages have hampered the overall production of single-family homebuilding in August for a second straight month. Homebuilders continue to deal with labor and raw material shortages which are affecting the number of homes they are able to complete, thereby also negatively affecting the housing market as a whole. Because of this new data, signs suggest that the housing market could negatively affect overall economic growth for the third quarter this year.   

New data from the Commerce Department details exactly how these various shortages have affected homebuilders in August. Because of these shortages, many home builders haven’t taken on the average number of projects they normally would, mainly because it takes much longer — and costs more — to build a single-family home. However, even though homebuilders aren’t taking every job offered, the number of homes authorized to be constructed that haven’t yet started construction raced to a new record high in August, according to the report from the Commerce Department.

Some of the many issues hampering homebuilders from earlier in this year are slowly going away. For example, lumber prices have finally started to fall after reaching extraordinary heights in price. Unfortunately, these prices haven’t yet been available to homebuilders as a whole, as the surge for lumber is still affecting obtaining lumber at a reasonable price for many. 

Other raw materials also remain in incredibly short supply, thereby also remaining at a high price than normal. From windows to cabinets, so many parts of homebuilding remain low in stock for many homebuilders around the country. Because of this low inventory of vital materials, it has become difficult for homebuilders to quickly build single-family homes.

As a result of all of these issues, it’s become rather difficult for many to buy a home in the past few months. First-time home buyers, in particular, have almost been shut out from the market as limited homes hit the housing market available for sale or construction. Home prices also have surged because of all of these shortages, yet another factor that is keeping first-time buyers from investing in a new home.

However, much like other aspects of the economy, there are positive signs for homebuilders in the future. A new survey conducted by the National Association of Home Builders revealed that single-family homebuilders’ confidence actually rose after hitting a 13 month low. However, even though average confidence for homebuilders as a whole rose, the survey does still acknowledge that the various shortages which have plagued the housing market will likely still exist into the near future. 

Homebuilding has become rather difficult in 2021, mainly because of the COVID-19 pandemic and all the shortages that have come with the worldwide pandemic. Consumer demand for a new home surged in 2020 as many people migrated from cities to areas where they could comfortably work from home. Now, however, these housing problems have definitely limited consumer demand. 

As a result of these continuous problems, the housing market may continue to negatively impact the overall economic growth expected in the third quarter — as well as the economic growth for the rest of the year.

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