Builders report material shortages, higher prices

Homebuilders are having trouble ramping up the supply of new homes to meet the demand. Rising prices and shortages for some materials are a problem.

By Teresa at MSN Real Estate Jul 3, 2013 2:03PM

Apartments being built near Fresno, Calif. (© Mark Crosse/ZUMA Press/Corbis)Here’s another reason builders are having a hard time meeting the demand for new homes: shortages of key building materials.

 

According to recent surveys of members by the National Association of Home Builders and the National Lumber and Building Materials Dealers Association, builders and lumber dealers are seeing shortages of lumber and wallboard. They also report rising prices for materials.

 

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"Supply constraints are one of the barriers to a more robust recovery," NAHB chief economist David Crowe said in a news release. "The shortages and price increases reported by both home builders and lumber dealers are particularly concerning given that the current rate of construction is still far below what would be considered normal or necessary to meet underlying demand."

 

About 22% of builders reported shortages of oriented strand board, 22% reported shortages of wallboard, and 18% reported shortages of framing lumber or plywood.

Even more dealers reported shortages. A total of 36% reported shortages of framing lumber, 27% to 28% reported shortages of oriented strand board and plywood, and 12% reported shortages of wallboard.

 

While the shortages are not as acute as they were in 2004 and 2005, when builders were producing twice as many new homes, builders are seeing more shortages of many products than they saw in 2011 or 2012.

Builders reported a 5.17% increase in the cost of materials in the last six month, while lumber dealers reported price increases of 10% or more.

 

"While a nascent housing recovery is underway, as reflected by the modest increase in sales by dealers, it’s clear that the ongoing material shortages and price increases being reported by dealers continue to be a cause for concern as we move into the latter half of 2013," Michael O’Brien, president and CEO of the lumber dealers’ group, said in a news release.

In addition to suffering shortages and rising prices of materials, builders are having a hard time finding skilled labor and, in some cases, lots. Land prices also are rising.

 

"We’re seeing somewhat of a bottleneck," Michelle Meyer, senior U.S. economist at Bank of America, told Bloomberg. "Higher costs are one reason home construction is not rebounding faster."

 
44Comments
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So it is nonsense: and which Construction company do you own?
Jul 3, 2013 9:12PM
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some of the posts are interesting ,can't log with the tree huggers stopping every operation , the mills are on reduced staff from five years ago now people have either moved to N.D. oil fields or they like unemployment so much they won't take a real job, Canada exports tons of OSB to the U.S. yearly I live in an area that had 6 mills running 24/7 now we have 2  maybe two shifts: If property was ruined ,fire ,flood, tornado , etc  and the house wasn't paid for and the insurance company paid a claim, the lender, got the first check, the  occupant might have got something for personnel effects

The news  don't tell you anything 6 months later  unless your in N.J. and they want you to visit and spend your money They (the  news) won't tell you about the 70 million that was scammed from FEMA

in Louisiana and what  is being done about it or who was responsible. won't say ant more on the Verizon net work and some one is watching

 

Jul 3, 2013 9:00PM
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Lumber shortage huh? Ya'll should swing by Longview Washington some day and check out the size and quantity of ships that leave out of the Weyerhaeuser port loaded up with American trees headed over seas.

Jul 3, 2013 8:48PM
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Material shortages, who do these jerks think their joking?  Here in the northwest there is no "shortage" so stop trying to pull the wool over the buyers eyes and tell the truth.....You just want more money for less work.....................PERIOD...................................
Jul 3, 2013 8:38PM
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there are piles and piles of drywall at any lowes or home depot. The builders used the shortage excuse back in the eighties when reaganomics desemated the housing industry with the immigration bill. housing prices went  way up but the drywall contractors got screwed!
Jul 3, 2013 8:38PM
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I think China has a back log of drywall. I'm these billion dollar construction firms can figure out a way to put them in their houses again.
Jul 3, 2013 7:57PM
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speaking of research, how hard is it to research the Check Spelling box before you post.  The extra space in my post doesn't count.
Jul 3, 2013 7:52PM
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Maybe I'm a schnook, but we've had a long period of suppressed demand and, as a consequence production slowed.  Plants closed or cut back shifts.  That's the only true business cycle: too much,t hen too little.  There will be more presently and the price will go down.  Not as much as it should, of course.
Jul 3, 2013 7:49PM
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Greed is eating the world alive,as it is written so it shall be.
Jul 3, 2013 7:36PM
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(Sarcastically speaking) Gee!  I wonder if Superstorm Sandy in 2012 could have had an effect with building materials supplies!?

A storm on that magnitude would have a BIG effect with materials inventories.  And lest not forget the midwest tornadoes with the rebuilding efforts going on there, too.  
Jul 3, 2013 7:08PM
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Of course there is a shortage.  That is what always precedes an employment turnaround.
Jul 3, 2013 7:02PM
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Uh huh, pull my finger. We had a sheetrock shortage for awhile and an insulation shortage ( it's made out of sand) and then a plywood shortage (we're sending it to the middle east) but when the price gets right the trucks start to roll. Kinda like gasoline.
Jul 3, 2013 6:50PM
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What material shortages ?  There is more  supply of OSB , LUMBER in the supply chain than man can use right now.  OSB has dropped in price from $495 mbf to  $240 mbf in less than 2 months.  
The only shortage is in labor.  I wish people would do there research and call the people who know , like the wholesalers and lumber yards before they spout this miss-truths.  
Jul 3, 2013 6:43PM
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Think about it. We're in the worst economic disaster since the GREAT DEPRESSION!!!! They should be giving the materials away but NOOOO, we have a shortage, you know , like a shortage of oil or a shortage of refinery capacity. 
Wake up America, Its all BULL S__t. 
Jul 3, 2013 6:21PM
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well what a surprise all kinds of work and no skilled labor to perform it; I guess they will have to start paying more than minimum wage for skilled framers ,drywall hangers, concrete workers and roofers.
Jul 3, 2013 6:19PM
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No mention of another cost-increasing culprit:  permits and impact fees.
Around here,  the average house costs $45,000 in upfront paperwork before anything on the land is built.
Add to that the hard costs,  costs of financing,  overhead and builder's profit,  and you've got construction-led inflation staring you in the face.

Jul 3, 2013 6:19PM
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If people are still being foreclosed on, why do you need to build more new houses? Who's going to fill them?
Jul 3, 2013 6:10PM
Jul 3, 2013 5:56PM
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Shortage at what price?  The dollar is not worth what it was a few years ago and it's becoming worth less every year.  That's inflation and  Uncle Sam controls paper money.  They have printed lots of it. 

Look for more of the same.

Jul 3, 2013 5:55PM
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Oh goody. A few months ago Bloomberg reported a glut of building materials, now a shortage??
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