The National Association of Home Builders CEO Jerry Howard argued on Tuesday that there was no improvement in the supply chain for home builders and warned that the market is looking into the teeth of a superstorm. Howard stressed that supply chain disruptions and labor shortages are contributing to the problem.
His labor cost went up 8% year-over-year and now with inflation interest rates are going up, he said. We are not facing any headwinds right now, but we are looking into the teeth of a superstorm. Howard gave the insight on Varney Co. the same day it was revealed that homebuilder confidence in the market for newly-built single-family homes dropped one point lower to 83 in January, according to the NAHB Wells Fargo Housing Market Index.
Even though consumer demand remains strong, concerns over inflation and ongoing supply chain disruptions snapped the four-month rise in homebuilder sentiment, according to the NAHB news release.
Howard told host Stuart Varney on Tuesday that the demand is still there, which keeps us above board right now.
Last month s data ties the highest reading of 2021 that was posted in February.
The index can range from 0 to 100 with any print over 50 indicating positive sentiment. Any reading above 80 indicates strong demand.
Inflation rose at the fastest pace in nearly four decades in December, as rapid price gains fueled consumer fears about the economy.
The consumer price index rose 7% in December from a year ago, according to a new Labor Department report released Wednesday, marking the fastest increase since June 1982, when inflation hit 7.1%. In the one month from November, the CPI, which measures a wide variety of goods, ranging from gasoline and health care to groceries and rents, jumped by 0.5%.
Economists were expecting the index to show that prices surged 7% in December from the year-ago period and 0.4% from the previous month.
The price of shelter went up 4% in December from the month before and 4.1% from the year before, according to the latest data from the Labor Department.
Howard warned that people should expect long delays for appliances and other components for building and that costs are up 21% a year over year. He said he had spoken with a builder in Idaho on Tuesday, who told him he had just been notified by a major kitchen appliance manufacturer that he should expect 8 to 10 month delays on his appliance order, and that is typical. Chuck Fowke, NAHB Chairman, said that higher material costs and lack of availability are adding weeks to typical single-family construction times. Fowke noted that the aggregate cost of residential construction materials has gone up almost 19% since December 2021, according to NAHB analysis. He stated that policymakers need to take action to fix supply chains and that a new softwood lumber agreement with Canada and reducing tariffs is an excellent place to start. He called for President Biden to provide access to a steady, affordable supply of lumber and to fix the overall supply chain.