Supply issues are increasing construction costs

New construction costs are rising
Increased costs and supply chain issues bring challenges to the new home construction market.

The significant shortage in inventory of homes for sale has resulted in an even larger dependence on new home construction. According to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), builder sentiment continued to slip in the month of February despite strong buyer demand. Ongoing building materials delays and shortages is resulting in higher construction costs and delayed projects.

Home builder confidence

Residential construction costs are up 21% on a year-over-year basis, and these higher development costs are impacting many buyers. This is subsequently resulting in a slightly decreasing builder confidence. Higher building costs combined with rising interest rates will certainly decrease buying power for home buyers as the year progresses.

In some cases, builders are being forced to wait months to receive cabinets, garage doors, counter tops and appliances. This is resulting in increased carrying costs for builders, which are ultimately passed along to buyers.


Overall, there is still strong buyer demand for new construction. With inventory challenges in the home resale market expected to persist, it is largely expected that the new home construction will remain strong overall. However, it is important to note that persistent inflationary pressures, supply chain issues, and increasing interest rates will provide more challenges moving forward. For buyers considering new home construction, this may be a race against time. Are you thinking about purchasing a newly built home? We can help. At Live South Florida Realty, Inc. we have decades of experience working in the new construction market.

At Live South Florida Realty, Inc. we have assisted many clients with their real estate needs. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!

By natasha moore

REALTOR® with Live South Florida Realty, Inc.

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