5 factors drive the cost of new homes — and all of them are squeezing builders and buyers now

It’s looking pretty gloomy for homebuilders, and that has downstream effects on homebuyers and renters.

August 1st, 2022 – MarketWatch – Building a home is a complicated business.

That’s because of a variety of factors — from navigating lumber tariffs to a shortage of labor. And with interest and mortgage rates rising, on top of inflation making building materials more expensive, homebuilder sentiment has plunged, as would-be buyers take a pause. 

To illustrate the five key drivers that influence homebuilders, the National Association of Home Builders’ chief economist Robert Dietz shared a list of the “5 L’s” of homebuilding with MarketWatch.

Every single one of these factors is presenting a challenge to builders at the moment, and that in turn is putting pressures on homebuyers, renters and others caught up in America’s housing sector.

Labor

It’s tough to find construction workers. So much so that one Harvard expert said the solution to fixing the shortage was to entice more women to join the construction sector, and to reform immigration laws so more immigrants could get construction jobs, too.

The construction industry needs about 650,000 more workers on top of the normal pace of hiring to meet demand this year, according to analysis by Associated Builders and Contractors.  

In 2023, the industry will need 590,000 more new workers to keep pace with demand, even after assuming construction spending growth slows…more

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