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M R EP O RT | 15 COVER STORY Anywhere. Anytime. MReport Digital Bringing Today's Lending Headlines into Focus, MReport Digital Puts Mortgage Banking News at Your Fingertips Experts you trust. People you know. News you want. MReport is putting essential mortgage market news at your fingertips with our new digital edition, now available online via your smartphone, tablet, or computer. Enjoy the magazine at your desk, and tap into MReport Digital's easily accessible platform anywhere, anytime. Committed to giving originators, servicers, and all lending professionals access to smarter perspectives, MReport believes it's time to think differently about the mortgage industry. Because the American Dream is evolving . . . are you? Subscribe to MReport and MReport Digital now! Call 800.856.8060 or connect with us online at themreport.com to take advantage of our special introductory offer! digital.themreport.com powered by THEFIVESTARINSTITUTE materials and the timeframe in obtaining these building materials, as 91% of builders expressed that as a secondary reason. Comparing these present-day numbers to 2011, when, according to a similar NAHB study, building material prices was reported as a significant problem by just 33% of build- ers, followed by 46% in 2012, 68% in 2013, 58% in 2014, 42% in 2015, 48% in 2016, 77% in 2017, 87% in 2018, and 66% in 2019, before peaking at 96% in both 2020 and 2021. In terms of materials, key to any new home construction is the lumber required to frame the home. After a few months of moderation in pricing in the summer and spring of 2021, the first few months of 2022 have found the cost of lumber reaching record numbers once again, further exacerbating an already dire situation. "Homebuilders simply cannot get access to the products they need to finish proper- ties and put homes on the market, so that's impacting home sales greatly," said Ralph McLaughlin, Chief Economist for proptech firm Kukun. "The consumer price for these products is rising at a pace not seen since 1975 and is hitting its highest point yet." According to Random Lengths Framing Lumber Composite, a broad measure of price behavior in the U.S. framing lumber market, as of December 29, the price of framing lumber topped $1,000 per thousand board feet—mark- ing a 167% increase since late August. NAHB estimates that this upward trajectory in lumber prices has forced the price of an average new single-family home to increase by more than $18,600. This price hike in one of the key materials in new construction has also added nearly $7,300 to the market value of the average new multifamily home, resulting in households paying $67 per month more to rent a new apartment. The home construction industry, like a multitude of the nation's trades, was impacted by the pandemic as a lack of skilled laborers played a key role when most states lifted their stay-at-home orders and workers were allowed to return to day-to-day life. Some were earn- ing more through their government stimulus than they were from their regular nine-to-five jobs, meaning it was more worthwhile finan- cially to remain on the sidelines than return to the workforce. In addition to supply-chain issues and the skyrocketing price of materi- als, the task of finding skilled construction labor became yet another factor in the lack of housing inventory and the rise in affordability issues. Findings by the Home Builders Institute (HBI) in its Fall 2021 Construction Labor Market Report noted that the required number of construc- tion workers to keep up with the nation's housing demand is approximately 740,000 new workers per year for the next three years. HBI based their study on an analysis of Bureau of Labor Statistics (BLS) data by the NAHB. The challenge of replenish- ing the nation's housing supply seems even more insurmount- able when described by Ed Brady, HBI President and CEO. "The construction industry needs more than 61,000 new hires every month if we are to keep up with both industry growth and the loss of workers, either through retirement or simply leaving the sector for good," Brady said. "From 2022 through 2024, this total represents a need for an additional 2.2 million new hires for construction. The construction worker shortage has reached crisis level. The situation will become more challenging in the coming year when other industries rebound and offer competitive wages and benefits to prospective employees." And it's not just new construction that has been impacted. Many DIYers who grew bored during the pandemic took up new hobbies and decided to take a shot on their own to renovate and spruce up their existing homes. "The supply chain disruptions have also "The fact that the builders decided to ramp up activity at precisely the time that the supply chain disruption occurred is just incredibly ironic, and very problematic." —Rick Sharga, EVP, RealtyTrac