Home building costs have increased the most since 1979 due to a shortage of materials. Unfinished homes pile up, total inventory is the highest since 2008. Prices soar as the low end dies
A glimpse of the shortage of glass and windows.
By Wolf Richter for WOLF STREET.
Shortages of windows and glazing have been reported for months. A survey of home builders, conducted by Burns Real Estate Consulting and released last week, found that 63% of home builders’ current construction delays are due to window shortages. Delivery times which were normally 2 to 3 weeks reached 4 to 15 weeks and for some products 20 to 45 weeks.
Further down the pipeline there is a shortage of glass. When the explosion in demand that began last year hit labor and material shortages among glass manufacturers, they were unable to operate at full capacity and were not in able to meet this demand. They started to prioritize what they made and affect their customers.
This has affected all kinds of glass products, glassware, fixtures, glass doors, shower screens, windows and even WOLF STREET beer mugs, the production of which has been “deprioritized” – it uses a lot of glass and is low margin. produced for the maker – since late May, sparking the infamous shortage of WOLF STREET beer mugs.
Window manufacturers who buy glass and make window frames and glass doors face their own problems. “Manufacturing windows – even in the most automated facilities – is very labor-intensive, making the industry even more vulnerable to labor shortages,” Burns Consulting said in the memo, pointing to PGT Innovations. [PGTI] and cornerstone [CNR], who both blamed labor shortages in their earnings calls.
The supply of resin, which is used in the production of vinyl, which is used as a coating for some window frames, was cut off when the Big Freeze hit Texas and the Gulf Coast. According to Burns, lead times for vinyl have increased to 4 to 15 weeks, with some window manufacturers allowing 20 to 45 weeks. Manufacturers have switched to alternative products for window frames, such as wood and aluminum, but they are facing aluminum shortages….
Construction companies are trying to solve this problem with alternative materials in order to avoid suspending a project due to shortages of all kinds, including some petroleum-derived insulation materials (due to the Big Freeze), steel beams , roofing materials, copper wiring, plumbing fixtures …
Builders have faced shortages of a whole host of household appliances, making it difficult to deliver a complete home. And costs are skyrocketing everywhere.
Single-family home construction cost index jumped 11.8% year-over-year in September, steadily within that range for the past four months, and the most since 1979, according to Commerce Department data today. The index is up 17.6% compared to September 2019. exclude the cost of the land and other costs not related to construction:
The new home market: a mess where the low end is dead.
Sales of new single-family homes in September were up from August, but were down 18% from September of last year, to a seasonally adjusted annual rate of 800,000 homes, according to the Census Bureau this morning. . Sales are well below their peak of 2002-2007, as demand for housing has shifted to urban cores, triggering a boom in large-scale high-rise condominium and rental apartment construction and residential buildings. ‘mid-rise buildings, which are not included here. These are only single-family homes:
Highest inventory of homes for sale since 2008: Total inventory for sale – homes not yet built, homes under construction, and homes completed – at 379,000 homes in August and September was the highest since October 2008:
Inventory for sale by stage of construction. A record 106,000 single-family homes for sale has yet to start as many projects are delayed by shortages of materials and labor:
Another 237,000 houses are under construction.
Unfinished homes – the total of homes that have yet to begin construction and homes under construction – reached 343,000 in August and September, representing a record 90.5% of total inventory for sale in August and September.
Completed homes for sale, at 36,000 in August and September, accounted for 9.5% of total homes for sale, a record high in data dating back to the 1970s – compared to the 25-year average of 28%:
Prices continued to climb as the high end exploded and the low end died. The median price – half of homes sold more expensive and half sold for less – hit a record high of $ 408,800, up 18.7% from a year ago.
- The low end is dead. Almost no home has sold for less than $ 200,000. Land and construction costs have overtaken this segment of the market.
- In the $ 200,000 to $ 300,000 range, only 12,000 homes have been sold, 19% of total sales, the lowest on record, down from 29% a year ago and 35% in September 2019.
- The range of $ 300,000 to $ 400,000 represented 24% of total sales.
- The $ 400,000 to $ 500,000 range also accounted for 24% of sales.
- And the high-end, over $ 500,000 of homes, accounted for a record 31% of sales.
The median price is skewed by a change in mix, and part of what we’re seeing here is the death of the low end and the boom of the high end, as sales have moved to where the money is:
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