Building material prices, production bottlenecks, and labor shortages will continue to dampen the pace of construction and affect home prices this year, economists told a crowd at the 2022 International Builders’ Show in Orlando.

Building material costs have surged 21% compared to a year ago. Further, more than 300,000 job openings went unfilled in the construction industry in December 2021. The National Association of Home Builders estimates that the residential construction sector will need to add 740,000 workers a year to keep pace with the industry’s growth, retirements, and departures.

Compounding matters further, inflation and interest rates both are on the rise. Economists predict the 30-year fixed-rate mortgage will edge closer to 4% by the end of the year.

Source: “Housing Affordability Will Remain a Significant Challenge in 2022,” National Association of Home Builders (Feb. 8, 2022)