Survey of Home Builders Highlights Barriers to Building Affordable Homes

The Harvard Joint Center for Housing Studies published a report, A Home Builder Perspective on Housing Affordability and Construction Innovation, that finds both single-family and multifamily home builders identify labor and building-material costs and availability to be the largest obstacles to building affordable housing. Seventy percent of builders find housing affordability issues to be a serious concern across the nation, and 75% find they are a serious concern in their market area. Findings are based on 290 usable responses from the HIVE Home Builder Survey distributed to home builders. 

Single family builders faced an average cost increase of 17% over the past two years, while multifamily builders reported an increase of 19%. Labor is identified as the largest barrier to building affordable homes, with 82% of single-family builders and 86% of multifamily builders rating the cost and availability of labor as “high importance” to the cost of homes built. The greatest concern on the cost and availability of labor is in the West, with 87% of respondents rating it as important, compared to 81% in the Midwest, 76% in the South, and 64% in the Northeast. Rising building material costs has also played a role in high home costs, especially lumber and plywood, which 76% and 70% of builders rated as important to the price of homes. The cost and availability of building materials was identified as more important to building costs in the South and West. 

Survey results also demonstrate that regulatory barriers add to the cost of a home, especially in metro areas. Seventy percent of single-family home builders and 75% of multifamily builders rate the permitting/development approval process as a top concern. Sixty-six percent of single-family builders and 83% of multifamily builders rate land/use zoning as important. Environmental regulations are also a concern for 51% of single-family builders and 67% of multifamily builders. 

There has been little change in home-building construction methods in the last forty years, but results suggest that change is slowly coming. Sixty percent of single-family builders and 69% of multifamily builders say there has been no, little, or moderate change to home building construction methods in the last 40 years. Eighty-five percent of single-family builders and 82% of multifamily builders indicated they “stick-build” homes, the traditional building method, during 2017. Forty-six percent of builders indicated, however, that they would increase their use of innovative construction methods such as factory-built/modular, pre-cut, open wall panels and closed wall panels over the next 2-5 years. Multifamily builders seem more likely to increase their use of innovative methods than single-family builders. Respondents report they believe there will be an increase in factory-built/modular housing in the coming years.

The full report can be read at: