An “unexpectedly quick” rise in interest rates, rising home prices and rents, and escalating lumber and material costs have significantly decreased housing affordability conditions, particularly for entry-level buyers and renters, according to National Association of Home Builders (NAHB) Chairman Jerry Konter in a new commentary.
Konter said that historically high price levels for lumber and other building materials are “dramatically affecting home prices and rental costs plus threatening the nation’s economic stability.” Prices for building materials have increased 19.2% year over year and have risen 35.6% since the start of the pandemic, he said, adding that production has also not kept pace with demand.
Additionally, Konter said that supply chain price increases have added to the ongoing housing affordability crisis, a result of bottlenecks that have caused many builders to delay or cancel projects because they don’t have access to lumber or other building materials at a reasonable price.
NAHB estimates a net deficit of U.S. housing totaling more than 1 million homes.
“Housing can do its part to create jobs and lead the economy forward, but in order to do so, the skyrocketing lumber and building material prices need to be addressed as well as the chronic production bottlenecks,” Konter said.