Construction cost on the rise for homebuilders amid supply chain shortages

BRYAN, Texas (KBTX) - Building a single-family home in the U.S. has never been more expensive. According to industry professionals, construction cost experienced the largest spike since 1970. Supply chain shortages, the price of building materials, and the cost of labor all have homebuilders struggling to keep up with the demand for new homes.

According to a recent report from the Texas A&M Real Estate Research Center single-family construction permits increased by nearly 5% in October 2021.

Homebuilders are having to adjust their standard operating procedures to address the supply chain issues and increase in building materials. Rob Hall, Owner of Hall Homes a home builder based out of Bryan-College Station says he noticed the changes last year.

“Starting last year has been an eye-opener as far as materials. Previous years I knew my cost pretty sharply,” said Hall. “Over the last year, I essentially have to reach out each month to all my vendors and contractors to make sure we’re still on point with pricing”

It takes an average of 180 days to build a single-family home and in some cases, it now takes just as long to get some building materials. Hall says it’s not just lumber and bricks that are in high demand.

“Windows for example, when we started framing we could order windows, and usually by the time the framer was done we’d have the windows delivered and installed right before they were finished now windows are taking 12 weeks to get,” said Hall. “Appliances is another item. You know appliances we used to be able to get appliances in a few weeks now in some cases were four months out.”

Homebuilders are now caught in the middle of a red hot buyers market and substantial supply chain shortages.

Experts like Texas A&M Construction Science Professor Randy Birdwell say these issues are changing some aspects of the industry.

“The normal sequence of building a home is changing because of some of the materials you have to wait for, so you basically have to build around that material,” said Birdwell.

Birdwell says the ripple effect of supply chain issues is even changing the way homes are being sold.

“Builders often have clauses now in contracts that say ‘you know what we gave you a price but when you close on your home it may be a higher price,’” said Birdwell.

Hall says despite the ever-changing industry and challenges he’s grateful for customers that understand the challenges builders are facing.

“That was my number one concern,” said Hall. “How are my homeowners gonna think about what’s going on? Every single one of them has been so understanding.”

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