Is the Broken Housing Supply Chain Starting to Mend? | John Burns Real Estate Consulting

Is the Broken Housing Supply Chain Starting to Mend?



When COVID-19 hit in 2020, we found out just how critical the supply chain was to almost every part of our economic life. Perhaps no industry has been more impacted by supply chain bottlenecks than housing. A diverse array of products that go into our homes, and the labor that makes and installs them, have been disrupted. Although there have been other supply shortages in the past, the magnitude and suddenness of the disruption to global supply flows was unprecedented.

For the latest episode of The New Home Insights podcast we talked to not one but two experts. Greg Brooks with the Executive Council on Construction Supply and our own Chris Beard at John Burns Real Estate Consulting both closely monitor the building products space. Greg and Chris joined us to share their insights on housing supply chain disruptions, what’s happening right now, and what might the future hold.

Some key takeaways:

What caused the disruptions?

  • Labor took a hit. Fewer workers and sick workers affected every economic sector, including housing.
  • The workers that were still in the factories and distribution centers faced a sudden shortage of components made overseas.
  • Weather piled on, causing hiccups in important chemicals used in building products such as resins, as well as harvesting wood for lumber and panels.
  • Transportation shortages and high freight costs for trucks, trains, and ocean vessels took their toll.

What products were most affected? And what was the result?

  • The short answer is—all of them. Virtually every product has been impacted at some point.
  • Products with more complicated supply chains such as windows have been hit the hardest and longest, whereas other products such as lumber have been gradually improving.
  • These disruptions have elongated build times and longer lead times leave more room for further disruptions due to labor, components, etc.
  • Supply shortages—particularly at a time when housing demand was spiking— have led to huge price increases across most building products.

When is it going to get better?

  • As demand softens from lower housing starts, product availability has improved for many products, though others remain on long lead times.
  • We can already see improvements in the supply chain and more are coming, which will ease supply shortages and help tame prices.
  • PropTech—technology developed for the real estate sector. Real estate is poised to finally join the 21st century

Interested in a deeper dive on this topic and our complete building products outlook and spending forecast? Please fill out this form or contact Client Relations for more information.


For a full transcript of this episode, click here.

 

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Dean Wehrli If you have any questions about our podcast, please contact Dean Wehrli, Principal at (916) 647-3263 or by email.
Chris Beard If you have any questions, please contact Chris Beard, Director, Building Products Research at (419) 215-1881 or by email.