By Jack Donaldson, D.R. Horton
As anyone trying to buy a house in 2021 knows: demand is high, supply is low, competition is fierce and it seems like people have lost their minds. With inventory scarce for existing homes, you might think this is the perfect scenario for homebuilders to ramp up supply. Unfortunately, new home construction has its own set of challenges adding to the headache.
Demand is still high, but builders are having a hard time keeping up. They’re facing shortages and delays in the goods and products that go into construction of a new home, like lumber and appliances. In fact, exorbitant lumber prices have contributed approximately $36,000 to the average cost of a new home. While Indiana doesn’t typically see the intense swings experienced on the coasts or other hot markets, these challenges are affecting everyone. Adjusting to the current market, this article from Bloomberg explains that some builders are hitting the brakes on new contracts or modifying their existing contracts to account for the uncertainty.
These changes include delaying sales or not entering contracts until the homes are near completion. Some builders are utilizing escalation clauses and/or opt-out clauses in their contracts to account for the fluctuating costs and unpredictability. In some states, a customer’s only option is to sign up for a waitlist or attend an auction in order to buy a newly constructed home.
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