Builders are experiencing problems in procuring appliances for their new homes amid a COVID-19 pandemic-linked surge in demand for the products.
The high demand of household appliances is due to a sharp uptick in home remodeling projects, which have suddenly become very popular as people are forced to spend more time at home. In addition, new homes are selling faster too, and now builders are facing shortages of products such as washers and dryers, refrigerators and other appliances.
A February survey by the National Association of Home Builders found that 90% of building companies in the U.S. have reported difficulty in getting appliances for the new homes they build. Of those, 51% said they were struggling to a “major extent”, while 38% said it was only to a “minor extent”.
Many builders reported that appliances have been on back order for months already. In the U.S., many new homes come with standard kitchen appliances, and that has led to a shortage of refrigerators, microwaves, dishwashers and range, cooktop and wall ovens, the NAHB said.
Some builders have still been able to sell their homes without all of those appliances, but the NAHB said that doing so is not always practical and it very much depends on the type of home and appliance.
Realty Biz News first reported on the appliance shortage in September, and at the time it was mostly consumers who were affected. But the NAHB said some builders began having difficulty in procuring appliances as early as March, soon after the pandemic took hold across the U.S.
Experts say the problem was that many homeowners quickly began stocking up on foodstuffs and bought extra freezers and refrigerators to accommodate this. In addition, many people began paying attention to hygiene and started washing their clothes more often to kill off any germs. As appliances were being used more frequently, many people sought to upgrade them. More recently, remodeling projects have begun to take off, increasing demand for home appliances even more.
The pandemic has also affected the supply chains of appliance manufacturers. Most of these companies never foresaw the huge demand for their products, leading to shortages. And their manufacturing operations were hit by large-scale closures of component-making factories in China and other countries. And even though most factories have now reopened, manufacturers are still trying to catch up.
The NAHB says the appliance shortage is widespread across all price points and alll brands. It said that some builders are forced to wait for months on end for their orders to be fulfilled, leading to delays in them bringing their new homes to market. Unfortunately, it doesn’t look as if the shortage will be relieved any time soon.
“Our backlog is still at the level it was at the end of the third quarter of last year,” Whirlpool CFO Jim Peters said in an interview with Yahoo Finance Live. “We have been able to ramp up production to keep in line where the current demand levels are. We expect to work through most of the backlog by the end of the second quarter.”
Peters said he believes the high demand for his company’s appliances is due to positive growth in the housing market, not only with new homes but also existing homes, as many buyers splash out on all new products when they first move in.
“Then, with consumers’ continued focus on the home and nesting, what we are seeing is more home renovation where people are investing in their kitchens that they have been spending more time in,” Peters said. “We continue to see that trend gaining steam.”