Anyone looking to build a new home is likely going to have to reach a little deeper in their pockets, plus wait a little longer for the finished product. According to local home builders, inflated prices on materials along with a labor shortage — in the midst of a rising demand for new and renovated homes — are causing concern for construction and development companies.
In addition to the pandemic spurring a home renovation boom, a lack of housing inventory has caused more people to build rather than buy. According to an article in Fortune, soaring lumber prices have increased by 208% over the last year.
“Lumber prices have escalated at an unprecedented rate,” said Thompson Homes owner Tommy Thompson. “Last year, lumber was priced at $319 per thousand board feet. Today it’s priced at $1,300 per thousand board feet.”
That translates to increasing prices on new homes. Thompson said those building new homes are paying roughly $24,000 more than they would have paid last year.
“That’s just to cover the cost of escalating lumber prices,” he said.
Even though prices are soaring, demand has remained high. Thompson called the industry “very strong,” though he said that was causing a number of other problems.
“They’re at capacity because of the demand,” Thompson said. “We’re in a reasonably-sized market. It’s not like Louisville or Nashville, but it’s a decent size. The laborers we have are good. There’s just a shortage of them.”
JMJ Construction is facing the same issues. According to Sales and Marketing Director Kristin Aull, JMJ has had to completely reevaluate the way they do business because of the escalating prices on materials.
“There’s been a serious increase in pricing, and it’s a struggle,” Aull said. “Before we even start a project, we order all the materials up front. The way we run our business now, compared to pre-COVID, is definitely different.”
Both Thompson and Aull said they thought prices on lumber would have gone down by now. However, high demand caused it to only get worse over time.
“I got a call today from one of the major manufacturers of PVC piping today, and they told us there’s going to be a 24% increase starting May 1,” Thompson said. “Not only is that a huge increase, but they’re experiencing a shortage of a component in that piping called resin. That’s impacted availability of the material, as well as costs.”
Aull said she’d been told prices would never go back to where they were before the pandemic. Customers have even asked those at JMJ if they’ll continue building.
“Yes, we’re building. Business is good, and we haven’t stopped,” Aull said. “We just have to plan 10 steps ahead now. We’re having to work with clients and explain all of this to them. Luckily, they know what’s going on.”
Shortages in other materials — such as drywall mud and sand used for windows — have caused delays in home building as well. According to Thompson, contractors are experiencing a six- to eight-week delay on window shipments.
Thompson said his company has had to put a number of home building projects on hold because of low availability and high costs of materials.
“We’ve had to start limiting projects we can take because of the backlog,” he said. “There’s been no curtailment in demand.”
According to Jagoe Homes Vice President of Operations Brad Jagoe, his company has experienced the same issue with rising costs of materials, but so far they’ve been able to get the materials needed to continue building.
“The relationships we have with suppliers go back decades, and this has helped us tremendously through this time,” Jagoe said. “2020 was our biggest year in history, and this year will be quite a bit bigger than last year.”
Jagoe predicted prices for lumber and plywood would go down, but not until next year.
“It takes a considerable amount of time to open a new lumber mill and get that additional supply to the market,” he said.
Thompson, however, said he’s not sure exactly when prices will come down.
“I thought we would’ve already seen a light at the end of the tunnel, but we didn’t,” Thompson said. “Now it’s peak building season. So if the market hasn’t moderated by now, it doesn’t look like it’s going to.”
