National Association of Home Builders CEO Jerry Howard argued on Tuesday that there is absolutely no improvement in the supply chain for home builders and warned that the market is “looking into the teeth of a superstorm.”
Howard stressed that supply chain disruptions and labor shortages are contributing to the problem.
“Our cost of labor has gone up 8% year-over-year and now with inflation interest rates are going up,” he said. “We’re not facing headwinds right now, we’re looking into the teeth of a superstorm.”
Howard provided the insight on “Varney & Co.” the same day it was revealed home builder confidence in the market for newly-built single-family homes dropped one point lower to 83 in January, according to the NAHB/Wells Fargo Housing Market Index.
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According to a NAHB news release, growing concerns about inflation and ongoing supply chain disruptions snapped the four-month rise in homebuilder sentiment even as consumer demand remains strong.
“The one thing that’s keeping us above board right now is the fact that the demand is still there,” Howard told host Stuart Varney on Tuesday.
Last month’s data ties the highest reading of 2021 that was posted in February.
The index can range between 0 and 100 with any print over 50 indicating positive sentiment. Any reading above 80 signals strong demand.
Last week, it was revealed inflation rose at the fastest pace in nearly four decades in December, as rapid price gains fueled consumer fears about the economy.
The consumer price index rose 7% in December from a year ago, according to a new Labor Department report released Wednesday, marking the fastest increase since June 1982, when inflation hit 7.1%. The CPI – which measures a bevy of goods ranging from gasoline and health care to groceries and rents – jumped 0.5% in the one-month period from November.
Economists expected the index to show that prices surged 7% in December from the year-ago period, and 0.4% from the previous month.
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Price increases were widespread with the price of shelter rising .4% in December from the month before and 4.1% from the year before, according to the latest data from the Labor Department.
Howard warned that people should expect long delays for appliances and other components for building and that “costs are up 21% year-over-year.”
He said that he had spoken with a builder in Idaho on Tuesday who told him that he had just been notified by a “major kitchen appliance manufacturer that he should expect 8 to10 month delays on his appliance order and that’s typical.”
NAHB Chairman Chuck Fowke noted that “higher material costs and lack of availability are adding weeks to typical single-family construction times.”
Fowke also noted that according to NAHB analysis, “the aggregate cost of residential construction materials has increased almost 19% since December 2021.”
He stressed that “policymakers need to take action to fix supply chains” and noted that “obtaining a new softwood lumber agreement with Canada and reducing tariffs is an excellent place to start.”
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Howard also called on policymakers to take action.
He specifically called on President Biden to provide access to a steady, affordable supply of lumber and to “fix the overall supply chain.”
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