How Are Builders Countering Rising Costs and Shortages?

Raising prices and pre-ordering materials are the most common strategies builders are using in the face of supply constraints and escalating costs.

According to a June survey for the National Association of Home Builders/ Wells Fargo Housing Market Index, 62% of builders boosted home prices and 59% are ordering materials early. Other approached included using price escalation clauses (45%), waiting until completion or late in the construction phase to list spec homes (39%), and cost-plus pricing (32%).

While some of the most dramatic price increases over the past year involved lumber prices, this has caused very few builders to switch away from traditional wood framing, although some are considering it. In particular, 17% are considering switching to steel, 16% to structural insulated panels, 14% to insulated concrete forms and 8% to concrete masonry.