As a home builder in Arkansas, it’s important to know what the demand is for new homes and what sorts of constraints might keep you from moving that inventory once it’s built.
Not only do you have to consider how things are faring in the local real estate market, you have to consider larger scale forces. For example, like the effect that nationwide inflation and labor shortages are going to have on your business.
To help you plan with greater confidence, we’ve gathered some insights from the local and national stage that are currently impacting those of us in real estate.
6 Issues That Home Builders Should Know About
Here are the biggest factors affecting housing and real estate at the moment:
1. Housing Shortages
When looking at housing shortages, we’re comparing two factors:
- The amount of new homes constructed
- The amount of new households formed
Ideally, there would be enough new homes (along with multifamily constructions) to fulfill the demand for housing each year. However, there continues to be a significant gap between housing supply and new households.
In 2025, the disparity between available housing and new potential homeowners resulted in a nationwide housing deficit of 4.03 million homes.
There are a number of reasons for this underbuilding issue. Things like permits, zoning restrictions, and local regulations slow down the pace at which home builders can work.
(Source: Realtor.com)
2. Rising Construction Costs for Builders
Regulations and compliance aren’t the only factors keeping home builders from meeting demand. The cost to construct new homes continues to increase in areas like:
- Labor wages
- Impact/hook-up/inspection-related fees
- Tariffs on materials
To make matters worse, the rising costs are unpredictable. For instance, the cost of materials rose by 3.4% from 2024 to 2025. But it wasn’t consistent. For instance, between December and January, it rose 3.24%. From February to March, it rose 1.5%.
It’s difficult to maintain profitability when expenses are no longer predictable or stable.
(Sources: Realtor.com, NAHB)
3. Staffing Shortages in Construction
Labor wages are up and the availability of skilled labor is down. So, even when home builders are able to deal with mounting costs, they’re often short on the labor needed to fulfill demand.
Labor shortages in construction are leading to issues like inflated construction costs and delayed projects (adding up to two months to a projected timeline). Not to mention the limited housing supply.
According to Jim Tobin, the president and CEO of NAHB, the construction industry in this country has a shortage of about 250,000 workers.
(Source: FOX13)
4. Rising Housing Costs for Buyers in NWA
The good news is that Northwest Arkansas is experiencing rapid growth — more so than most of the country. As new residents pour in, more housing is needed.
The bad news is that the cost to purchase land and a home has gone up, too.
From 2022 to 2023, the median price of an existing single-family home in NWA rose from $329,200 to $346,900 (a 5.4% increase). In Benton County, specifically, the cost of land just about doubled from 2019 to 2023.
To make matters worse, household income has not kept pace.
Local legislation is being passed which allows builders to turn land zoned for single-family homes into accessory-dwelling units. Still, prospective homeowners are feeling the squeeze.
(Source: Urban Land Institute)
5. Additional Buyer Concerns
There are other reasons why prospective buyers are delaying a new home purchase:
- 81% are waiting to see if prices and interest rates drop
- 65% are worried about employment and financial stability
- 63% can’t afford the cost of developed lots
- 62% feel anxious about the real estate market because of negative news reports
So it’s not just rising costs and economic uncertainties that are keeping home builders from constructing at a pace that will meet demand. It’s got many consumers delaying their decision to buy, too.
(Source: NAHB)
6. Mortgage Rates Are Up; Mortgage Applications Are Down
When home builders were asked in 2025 what their greatest challenge was, 84% agreed it was elevated mortgage rates.
Looking at the numbers:
The average 30-year fixed-rate mortgage was 6.67% in August 2026. That’s 13 basis points higher than it was in July.
The average 15-year fixed-rate mortgage was 5.98% in July 2026. That’s 55 basis points higher than it was in February.
The 10-year Treasury yield (which relates to long-term borrowing rates) was 4.68% in August. That’s 10 basis points higher than it was in July.
Because of climbing mortgage rates (and other inflationary costs), prospective households are delaying the purchase of a home. According to the Mortgage Bankers Association, application volumes decreased 6% from July to August 2026.
(Sources: NAHB, Eye on Housing, Scotsman Guide)
A Positive Outlook for Home Builders in Arkansas
Despite the obstacles that home builders and others in the real estate industry are up against, Arkansas has a more positive outlook than most of the United States.
According to Realtor.com’s 2026 Affordability & Homebuilding Report Card, Arkansas received a B on its report card and is ranked #9 in the nation.
In terms of affordability, the state got a score of 64.0. This metric tells us how affordable the share of for-sale inventory is compared to the median household income.
In terms of homebuilding, the state got a score of 66.4. This metric tells us if home builders are creating enough inventory to meet consumer demand. It also factors in the cost of new homes relative to existing inventory prices.
What Arkansas’s scores suggest is that there’s sufficient inventory for a wide range of households.
Wrapping Up
So, yes, there are major issues that home builders have to contend with right now. However, Arkansas seems to be faring much better than other areas of the country.
The key to navigating this turbulent landscape is to keep your eyes on the factors affecting the industry and nation as a whole so that you’re ready to pivot as things change. It’s also important to find partners (like Foster Roofing) who are doing the same.
If you’re looking for a residential roofing partner who can deliver top-quality roofing solutions in a timely and cost-effective manner, reach out to Foster Roofing today.