Delays and steep costs continue to plague construction market

“Builder sentiment has declined every month in 2022, and the housing recession shows no signs of abating as builders continue to grapple with elevated construction costs and an aggressive monetary policy from the Federal Reserve that helped push mortgage rates above 6% last week, the highest level since 2008,” Dietz added.

“Buyer traffic is weak in many markets as more consumers remain on the sidelines due to high mortgage rates and home prices that are putting a new home purchase out of financial reach for many households,” said NAHB chairman Jerry Konter. “In another indicator of a weakening market, 24% of builders reported reducing home prices, up from 19% last month.”

However, data from NMHC’s survey findings showed that 76% of respondents experienced price increases in projects, at an average rate of 9%, due to building material costs that are still on the rise. Labor costs continued to climb as well, with 21% of respondents saying that labor costs had increased more than expected over the past three months, though encouragingly, that was the lowest percentage in the last three quarters.

On the bright side, lumber prices, which set the pandemic on a rollercoaster ride, now seem to be decreasing. On average, lumber prices in Q3 dropped 2% for the second consecutive quarter.