Home construction costs have risen to their highest level since 1979 due to material shortages. Unfinished homes pile up, total inventory highest since 2008. Prices climb as bottom end dies

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An overview 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 homebuilders, conducted by Burns Real Estate Consulting and released last week, found that 63% of current homebuilder construction delays are due to window shortages. The delays which were normally 2 to 3 weeks reached 4 to 15 weeks and for certain products extended up to 20 to 45 weeks.

Further up the pipeline, there is a shortage of glass. When the explosion in demand that began last year hit labor shortages and material shortages among glass manufacturers, they were unable to operate at full capacity and did not could respond to this request. They started to prioritize what they make and affect their customers.

This has affected all sorts of glass products, glassware, light fixtures, glass doors, shower enclosures, 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 manufacturer – since the end of May, triggering the infamous shortage of WOLF STREET beer mugs.

Window manufacturers who buy glass and manufacture window frames and glass doors have their own problems. “Window manufacturing – even in the most automated facilities – is labor intensive, making the industry even more susceptible to labor shortages,” Burns Consulting said in the note, 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 interrupted when the Big Freeze hit Texas and the Gulf Coast. According to Burns, vinyl lead times have gone from 4 to 15 weeks, with some window manufacturers seeing 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 to avoid putting a project on hold due to shortages of all kinds, including some petroleum-derived insulation materials (due to the Big Freeze), steel, roofing materials, copper wiring. , plumbing fixtures…

Builders have encountered shortages of a range of appliances, making it difficult to deliver a competitive home. And costs are rising at every level.

The construction cost index for single-family homes jumped 11.8% year-over-year in September, relentless in 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. excludes the cost of land and other non-construction costs:

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 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 2002-2007 peak as housing demand shifted to urban cores, triggering a boom in large-scale construction of high-rise condominiums and rental and mid-rise buildings, which are not included here. These are only single-family homes:

Inventory of homes for sale at its highest since 2008: Total inventory for sale – homes not yet started, 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 have yet to be launched as many projects are delayed by material and labor shortages:

Another 237,000 houses are under construction.

Unfinished homes – the total of homes that have not yet started 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, an all-time high in data dating back to the 1970s – compared to the 25-year average of 28%:

Prices continued to soar as the high end exploded and the low end died. The median price — half of homes sold for more and half for less — hit a record high of $408,800, up 18.7% from a year ago.

  • The low end is dead. Almost no homes were sold for less than $200,000. Land and construction costs have outpaced this segment of the market.
  • In the $200,000 to $300,000 range, just 12,000 homes were sold, 19% of total sales, the lowest on record, down from 29% a year ago and 35% in September 2019.
  • The $300,000 to $400,000 range represented 24% of total sales.
  • The $400,000 to $500,000 range also accounted for 24% of sales.
  • And high-end homes, over $500,000, accounted for a record 31% of sales.

The median price is skewed by a shift 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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