What Are the Top Challenges Builders Faced in 2019 and Expect in 2020?

If you were a builder in 2019, this shouldn’t come as a surprise: The cost and availability of labor were the greatest challenges faced by builders last year. And that problem is not going anywhere anytime soon, according to a survey for the NAHB/Wells Fargo Housing Market Index. But the labor shortage isn’t the only thing on builders’ minds. The cost of lots and building materials and negative media were also challenges builders expect for the coming year. Even as the market heats up and the industry continues to recover, being a successful builder takes careful planning to address these barriers.

Cost and availability of labor topped the list of problems builders faced in 2019, and is expected to return to the number one spot in 2020, according to special questions on the December survey for the NAHB/Wells Fargo Housing Market Index.   The survey results showed that cost and availability of labor were a significant issue for 87% of builders last year. In 2020, however, a slightly smaller share – 85% of the builders – expect them to continue being a problem. The second most widespread problem in 2019 was building materials cited by 66% of builders. Unlike cost and availability of labor, the share of builders expecting building materials to be a problem this year is the same as share reporting it a problem last year.

In 2011, cost and availability of labor was reported as a significant problem by only 13% of builders. The  share increased to 30% in 2012, 53% in 2013, 61% in 2014, 71% in 2015, 78% in 2016, 82% in both 2017 and 2018, before peaking at 87% in 2019. Meanwhile building materials prices was reported as a significant problem by 33% of builders in 2011, followed by 46% in 2012, 68% in 2013, 58% in 2014, 42% in 2015, 48% in 2016 and 77% in 2017, 87% in 2018 and 66% in 2019.

Another significant problem that builders faced in 2019, and is expected to face in 2020 is cost and availability of developed lots. In 2011, cost and availability of lots was reported as a significant problem by 21% of builders. The share increased to 34% in 2012, 46% in 2013, 55% in 2014, 58% in 2015, 60% in 2016, 58% in both 2017 and 2018, 63% in 2019 and 66% of builders expect it be a problem in 2020.

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