Inbound Logistics | September 2022

Home Construction

IF YOU BUILD IT, WILL THEY COME? In the aftermath of the housing frenzy that occurred during the pandemic, the country now faces a major slowdown in the housing market. Homebuyers are skittish and demand is cooling, thanks to high inflation and rising mortgage rates. As a result, homebuilding numbers are on the decline. New housing starts—the barometer of the industry’s health—fell to the lowest level in more than a year, as the U.S. government reported in July 2022 (the most recent data available at press time). The figure plunged 9.6% month-over-month to an annualized rate of 1.446 million units in July 2022, the lowest since February 2021 and well below market expectations of 1.5 million. Homebuilders are bracing for more disappointing numbers, as demand for new housing units stagnates. Suppliers, manufacturers, and other vendors up and down the home construction supply chain can also expect to feel the pinch. A few additional stats from the government’s July numbers illustrate the sector’s current shaky status. • Building permits were slightly above expectations at nearly 1.7 million, but fell about 1.3% from June and are down from about 1.8 million in April. • Housing activity could fall roughly 30% or more over a multi-year period in a worst-case scenario, Fitch Ratings predicts, pushing home prices down between 10% to 15%. • In one bright spot, permits for multi-family units rose 2.8%, helping to o set the steep 4.3% drop in the single-family sector. Lower lumber prices and still-high rents may incentivize builders to construct more multi-family units.

Fighting a laundry list of challenges— including pandemic disruptions, labor shortages, supply chain issues, and increases in real estate and building materials costs—nonprots in the homebuilding sector have had to tap their inner innovators to stay on track with their mission of building affordable homes. Supply chain woes have been hard on Habitat for Humanity, for example. The organization has responded by storing windows, refrigerators, and other materials in warehouses to ensure it has the supplies stocked when they are needed. In addition to constructing new homes, Habitat for Humanity repairs properties and does rehabilitation construction—services that have kept it on track despite recent issues. The organization also has altered some of its strategies as workarounds. It is looking at ideas like “Can we increase density? Can we look at accessory dwelling units? Can we look at compact- size homes that will meet different needs when we think about veterans and the elderly?” Adrienne Goolsby, senior vice president of Habitat for Humanity, told ABC News in Denver. Thanks to its creative planning, the nonprot expects to continue its trajectory of building nearly 3,000 homes each year. GETTING CREATIVE ABOUT BUILDING SUPPLIES

CALIFORNIA HERE WE COME Home improvement retailer Home Depot is making moves in Southern California. In April 2022, the company leased a 1.1-million-square-foot warehouse in the Inland Empire region, and just announced it is taking another 529,866 square feet in a new building in Irwindale, California. The new facility, according to Duke Realty, is decked out with the latest proptech for managing indoor conditions through digital interfacing, and for meeting electricity needs through solar power.

12 Inbound Logistics • September 2022

Powered by