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New-home buyers are having a long wait for their homes to be done. Labor shortages and global supply chain bottlenecks are delaying the completion of many new-home construction projects. The number of housing units that were authorized but didn’t start construction yet rose by 47% nationwide from 2019 to 2021, according to a new analysis by LendingTree researchers. The delays were most prominent in the Northeast, where delays more than doubled.
“Though homebuilders have tried to keep up with demand for housing, numerous setbacks including rising labor and raw material costs have prevented them from actually breaking ground on many of the projects,” says Jacob Channel, LendingTree’s senior economic analyst. “This has exacerbated the lack of housing available on the market and put upward pressure on home prices.”
The headwinds are coming at a time when new-home construction has been in demand among home buyers who have been frantic to find greater housing inventory. The number of housing units authorized by building permits jumped 25% from 2019 to 2021, according to LendingTree’s data.
“Despite these difficulties, the news isn’t all bad for homebuilders,” LendingTree researchers note in the study. “Even if rising mortgage rates weaken buyer demand and labor and supply issues persist, homebuilders will likely have plenty of opportunities to construct and sell new housing units as the year progresses. And though the road ahead may be bumpy, that doesn’t mean it won’t ultimately be rewarding for many of those in the construction business.”