Construction Industry in 2022: What to look out for 

As we head into year 2 of an ongoing health crisis, it’s difficult to gauge exactly how the construction industry will fare and what roadblocks could pose potential threats or inspire innovative solutions.  

One thing is clear, as we look at the year ahead, it’s important to take time to discuss what trends we’re seeing currently and how to best pivot and be flexible — something we’re all getting better at, thanks to the ongoing aftermath of COVID.  

Supply Chain 

While there are expectations that supply chain issues will improve in some areas, it’s clear that this will continue to be a problem for “material availability and higher costs” throughout the rest of 2022. The NAHB analysis shows that cost of residential construction materials has increased by almost 19% since December 2020, a figure that will only continue to rise if policymakers do not readily address the supply chain problem.  

Material Costs & Shortages 

Inevitably supply chain will continue to impact material prices, with costs having risen by 22% in the past year alone. NAHB’s assistant VP of forecasting and analysis says, “builders are reporting shortages of cabinets, appliances, windows, roofing materials, etc.”  

Inflation & Labor 

Labor shortage and inflation continue to cause major ripples in the job market, both on the side of construction workers and home buyers. One thing is clear – companies across the board are fighting tooth and nail to offer the most attractive environment to combat a shortage of dedicated employees, specifically when it comes to higher wages and better benefits.  

While this does offer increased spending power, the 3.5-5% increase to inflation YoY (its highest since the 90’s), is undermining this so-called spending power, especially for first-time home buyers. Inflation and higher costs are offsetting what would be a boom for the economy, specifically for new home buyers.  


Arguably the biggest issue to keep an eye on is housing affordability and how that will affect industry growth in 2022. While all the above topics will predict and have an impact on affordability, one major indicator is mortgage rates. National Association of Realtors’ Chief Economist Lawrence Yun predicts mortgage rates to increase by 3.7% and median home prices to raise by 5.7%.  

Not that this is slowing down home buyers (yet!) Zonda’s annual survey reported buyer hesitancy decreased in October 2021 but sited an increase of mortgage disqualification during the same period.  

Industry Growth & Looking Ahead 

While many of these factors will play an important role in the construction industry this year, the forecasted projection for home sales continues to be solid, and the competitive real estate market to be maintained.  

So how can builders go about managing this fragile eco-system and be on the forefront of emerging trends and changes to the industry?  

  • Partnerships – Establish partnerships with key players in the market that can offer the best insights and solutions, as well as keep you updated in real time on changes that could affect your construction timeline. 
  • Flexible Sourcing – COVID has proven that staying flexible and learning how to properly scale under current conditions (whatever they may be) will produce the industry-leading winners each time around. While maintaining partnerships is important, seeking out new contacts that could provide alternative solutions (like a local or regional supplier) or a new perspective could prove even more efficient.  
  • Alternative Options – Taking a closer look at emerging trends and new materials to pivot to something more sustainable and less susceptible to volatile pricing. The industry is already seeing an increase in mass timber, job site tech, and modular construction to name a few. 
  • Stay Agile – It bears repeating that through all the issues impacting our day-to-day work, rethinking how we do business and paying a close eye on the latest trends will keep you a step ahead of your competitor. As we continue to navigate the unpredictable, having back-up solutions, new initiatives and ‘out of the box’ thinking will keep your business agile and flexible.


COVID-19 Update: Job Growth, Inflation Risks, and Affordability Concerns: 

Experts Predict What the Housing Market Will Look Like in 2022: 

Home Builder Confidence Edges Lower on Inflation Concerns:

NAHB and NAR Economists Project What 2022 Housing Market Will Bring: 

Riding the Construction Wave: Boom or bust in 2022? Perhaps both: