MILTON — Scott Wheeler with Landcore Builders in Milton says increases in lumber and other homebuilding material prices, along with shortages, are starting to have an impact on new home construction.
“It’s causing costs to go up and it’s causing delays, which costs builders both time and money,” he said. “The bad part is, the demand for new homes is there but it’s hard to schedule and plan new construction with these lumber and other building materials issues that are currently going on.”
Since mid-April 2020, the composite price of lumber has soared more than 170%, according to Random Lengths, which is the most widely circulated source of information for the wood products industry.
Lumber prices increased 14.9% in August, marking the largest four-month gain since such data was first recorded in 1949 and the second-largest gain since seasonally adjusted data became available in 1975, according to data from the National Association of Home Builders (NAHB).
Kevin Alderman, who works in outside sales with 84 Lumber near Huntington, says most lumber prices have doubled in the last six months.
“A two-by-four pre-cut was around $3 six months ago and today it costs $7.76,” he said. “A four-by-eight sheet of flooring was around $30 six months ago and now it’s $45.68.”
According to former NAHB Chairman Randy Noel, who is also a custom homebuilder, the lumber crisis is becoming costly to homebuilders.
He said one example is a lumber quote he received from a supplier for more than $28,000 — twice what he had paid for the same lumber on a comparable project in February 2019. Oriented strand board alone, which Noel’s company uses frequently in its projects, had increased from $7.50 per sheet to $26 per sheet.
According to the NAHB’s recent report “Solving the Lumber Crisis,” the escalating prices in recent months are due to the fact that there is not enough domestic production.
“Many mills reduced production due to stay-at-home orders and social distancing measures enacted by state and local governments at the onset of the coronavirus pandemic. Mill operators projected that housing would be adversely affected by the crisis and anticipated a large drop in demand. But housing weathered the storm much better than was predicted, and demand for lumber has accelerated,” the NAHB report stated.
Wheeler says even if builders want move forward with construction, lumber and building material prices can change before the job is completed.
“It depends on the product, but generally the price from a supplier is good for about 30 days,” he said. “The price could change by the time a builder needs it delivered. I am just hopeful the prices will start going down in November.”
John Brumley, president of the Tri-State Home Builders Association, is a licensed contractor and says in addition to increased prices, lumber users are also reporting supply shortages.
“I was doing a job a couple of months ago and needed two-by-six feet exterior grade lumber, but I couldn’t find it anywhere,” Brumley said. “Exterior grade is a big problem, but white lumber is also in short supply. Homebuilders are definitely being restricted by the lack of materials.”
Brumley says many consumers are not aware of the situation.
“They ask, ‘Why is it taking so long?’ and the simple answer is we can’t get the materials,” he said.
Don Braley, superintendent with BMC Construction of Ona, says it not just the prices of lumber that have skyrocketed, but all homebuilding materials.
“Six months ago you could get a four-by-eight-foot OSB sheathing for $7.99 a sheet and today it’s $28 to $29 a sheet,” he said.
Braley feels if building material prices don’t go down by January things will get much worse.
“There will be a lot of construction workers sitting at home with no work,” he said.
Another side effect is the lumber price increases are adding approximately $16,000 to the price of a new single-family home and more than $6,000 to the average new apartment, according to the latest NAHB economic analysis.
While consumer demand remains high, it is also driving up the price of lots, which will need to be factored into home prices going forward, the NAHB said in its analysis.
“These issues are hurting lot sales,” according to Wheeler, who also sells lots. “I am hopeful that a solution can be found soon.”
NAHB senior officers and staff held a virtual meeting with U.S. Commerce Secretary Wilbur Ross last week to discuss the growing problem that escalating lumber prices and supply shortages are having on the housing industry and economic recovery.
The best immediate-term solution Noel sees on the horizon is to remove tariffs on Canadian lumber.
“If lumber mills are struggling to keep up, Secretary Ross can remove tariffs temporarily to keep lumber prices from skyrocketing,” he stated.
New home construction this year will hold steady at just under 900,000, about the same pace as in 2019, according to a projection by the NAHB. For 2021, the industry group forecasts that starts will increase slightly, but will be held back by the cost and availability of building materials.