Scarce Supplies Calls for Advanced Scheduling

Builders need immediate solutions for scarce supply

By Yvonne Nguyen

Sustainability and high performance homes have been on the rise in recent years, but lately, with the hot housing market and rising mortgage rates, affordable homes are becoming a high priority for buyers. 

A main cause for concern when it comes to keeping housing affordable is development delays due to supply shortages and supply chain disruptions. With lumber supply falling short in recent years – not to mention the inflated prices –  and delays due to supply chain issues, homebuilders are forced to extend lead times or compromise on sustainability practices in order to complete their projects, all of which ends up driving home prices up for buyers.

The U.S. government has been introducing legislation in support of sustainable and affordable housing. With initiatives like Justice40 and Better Buildings, builders are encouraged – and maybe even required – to build houses that meet energy efficiency standards. In order to help alleviate the new initiatives that call for energy efficient housing, Biden has also authorized the Defense Production Act to increase domestic production of supplies found in sustainable homes: solar panels, building insulation, heat pumps, etc. The Biden Administration is getting involved to help mitigate the costly and industry-wide shortages through investments and tax cuts. 

While new legislation can be helpful, builders need solutions that can benefit them in their immediate situations. It’s all been said before, but shortages in supplies and workers continue to wreak havoc on the home building industry. It is the main force driving up home prices during the construction process, all of which begs the question: how can homebuilders, despite the current obstacles, complete their projects without the cost being pushed onto buyers?

Stockpiling Supplies in Advance

A solution that can be implemented immediately is scheduling ahead and expanding inventory. With the lack of supply and increasing delays, lead times are now getting pushed by months. To get ahead of the situation, it may be beneficial for builders to start increasing their inventory now so that supplies are readily available when needed.

With an extended delivery time of 3-6 months, it could be a good strategy for builders to increase their stock of common building supplies and appliances, such as garage doors or dishwashers, or even window frames and treatments. The price of materials have proven to be volatile in recent years; it would benefit buyers to purchase supplies when they can before costs continue to rise – which will make it hard to keep new housing affordable since costs that are incurred during the construction period are reflected in the selling price of the home and pushed onto the buyer.

While not a long term solution, stockpiling materials may be the answer until government aid takes effect or the housing market naturally cools down. With the cost of lumber slowly coming down, who knows if the housing market will follow suit. 

Skilled Workers Needed

As far as the shortage of skilled workers is concerned, it was reported in the Openings and Labor Turnover Survey data from the Bureau of Labor Statistics that open construction jobs hit a record high in recent months. The report found that over 449,000 positions were unfilled, which is the highest rate in the last two decades, indicating that it is still a struggle for construction firms to find skilled workers. 

With the Infrastructure Investment and Jobs Act, alongside aforementioned initiatives, funds and opportunities are beginning to crop up for builders and ancillary trades. The Build Back Better plan was introduced to support affordable housing by providings funds for construction and development of affordable homes and, most importantly, funds for workforce development and education. With a growing aging workforce, it is increasingly important that resources and tools to lower the barriers to entry are provided for potential new tradespeople. 

As green home building becomes more prevalent, builders will have to get creative when addressing supply and labor shortages to deliver energy efficient, high performance homes. With a tight supply chain, shortage of skilled workers and increased costs across the board, homebuilders and developers have to come up with innovative solutions to ensure they can deliver a completed house in a timely manner, while keeping sustainability standards at the forefront of their practices.

Yvonne Nguyen is the Assistant Editor of Builder and Developer. She can be reached at yvonne@builder.media.

 

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