Builder Confidence Continues Growing, Though Supply Chain and Labour Challenges Persist
OTTAWA – April 27, 2022 – The 2022 Q1 release of the Canadian Home Builders’ Association (CHBA) Housing Market Index (HMI) shows builder confidence continues to grow even amid ongoing supply chain and labour challenges that continue to add to the cost of homes and delay construction timelines. The single-family HMI is at 89.4, an impressive 4.5 points higher than last quarter’s record high. The condo market softened slightly at the onset of the pandemic, but it too is seeing rising confidence, and is up two points from last quarter, coming in at 88.8.
The 2022 Q1 release marks one year since CHBA launched its residential construction industry sentiments indicator for both the single-family and multi-family markets in Canada, providing a leading market indicator before permits and starts. Released on a quarterly basis, the HMI is providing insight into the industry, including many of the issues that are affecting housing affordability.
“Lack of housing supply is a main contributor to escalating home prices in much of the country, and Canada needs to catch up from many years of underbuilding,” confirms CHBA CEO Kevin Lee. “It will take many years of sustained increased levels to make up the housing deficit, but last year was a banner year for housing starts, and 80% of builders expect to have as many starts in 2022 as they did in 2021, which would be a positive step in addressing chronic housing supply shortages.”
But for those who do not expect starts to be as high this year, 68% listed permitting/approval delays as a roadblock, and 61% said lack of land availability is the problem. “Both point to the important role municipalities play in increasing the housing stock to combat supply and demand imbalances,” Lee advises.
And while builder confidence is high, building materials challenges and labour shortages persist. Construction material price increases have added almost $80,000 on average nationally to the price of a 2,475 sq ft home since the start of the pandemic, and half of that increase is in lumber costs alone. Supply chain issues continue to cause delayed construction completion, with an average delay across the country of 10 weeks. Topping the long list of serious shortages are appliances, followed by garage doors, and bathtubs, showers and sinks, to name a few.
Labour shortages continue to cause construction delays for 71% of respondents and the cost of labour has gone up by 25% since the onset of the pandemic. Framers in particular are in demand. The industry is doing its best to address the immediate need for skilled trades, with over half of companies training existing employees to take on more responsibilities, 42% giving additional incentives and increased employee benefits, and 40% offering flexible work arrangements. These are positive moves from the industry, but many more people are needed, especially to ramp up starts to recover from the housing deficit and slow house price acceleration.
For more information on CHBA’s HMI, including the detailed methodology and key takeaways, please visit the official CHBA HMI webpage.
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MEDIA INQUIRIES
Journalists wishing to interview Kevin Lee, Chief Executive Officer of the Canadian Home Builders’ Association are encouraged to submit their request by email to media@chba.ca.
About the HMI
CHBA’s Housing Market Indicator (HMI) provides a much-needed leading indicator about the current and future health of the residential construction industry in Canada. It is the only sentiments indicator for the sector in the country and has been modelled on the very successful and influential American version delivered by the National Association of Home Builders’, which is used regularly by financial analysts, the Federal Reserve, policymakers, economic analysts, and the news media. Through the CHBA HMI, CHBA is doing the same for Canada. The CHBA HMI is released on a quarterly basis, providing a regular litmus test for the residential construction industry, which is one of Canada’s largest employers and whose health is critical to the overall Canadian economy.
To deliver the HMI, CHBA surveys an exclusive expert panel made up of single-family and multi-family builders from across Canada that reflect market conditions across the country. Panel participants are asked to rate market conditions for the sale of new homes at the present time and in the next six months as well as the traffic of prospective buyers of new homes. HMI numbers are not seasonally adjusted. Over time as more data is collected, the HMI will indicate trends in the market and will likely be able to predict housing starts six months in the future.