Builders Set to Face High Demand and Backlog of Home Orders in 2022

Investors are confident that national builders can take advantage of strong demand in the coming year to build the housing market out of a major supply deficit, but ongoing supply chain disruptions could put those plans on hold. A backlog of home orders favors builders in the new year, but if the 2022 market is anything like the one before it, builders may struggle to complete new home projects quickly enough to keep up with soaring demand. 

With a shortage of available homes on the market, sales are gradually decelerating, but the pressure on home builders is not easing, says The Orange County Register. The housing supply in 2022 hinges on new construction, but with inflated materials prices and long lead times, current delays will likely extend far into the year ahead. 

The global supply chain disruptions, rising inflation and a shortage of skilled labor, led to construction delays and uncertainty that forced many big builders to pump the brakes on the number of homes they put up for sale. As a result, many builders have seen their backlog of home orders they have yet to deliver on swell.

The dynamic has helped dampen sales of new U.S. homes in 2021. In October, new home sales hit a seasonally adjusted annual pace of 795,000, down 23% from a year earlier. In contrast, sales of previously occupied U.S. homes through the first 10 months of this year were up 11% from where they were in 2020, on pace for at least 6 million homes sold, which would be the highest number in 15 years.

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