Supply Chain Issues Affect Housing Market

It's no secret real estate values increased during the pandemic, with an unprecedented number of homes selling in bidding wars. Due to material shortages, delivery delays and cost increases, new home construction has struggled to keep up with the demand for housing. Lumber prices tripled from pre-pandemic levels, and these costs are often passed along to home buyers.

Although single-family housing starts have decreased, the number of homes under construction is actually up because houses aren't getting finished. Besides a shortage of building materials, construction – like other industries – has experienced major labor shortages, a considerable hurdle to completing projects.

Despite current construction woes, experts predict home builders will overcome supply shortages this year, enabling them to speed up construction to meet ongoing demands for new housing. More inventory should help keep prices in check and curb last year's sizable increases in home values.

Analysts are hoping that a gradual tapering down in housing starts may provide some relief, allowing builders to catch up with the backlog of demand.