Even before the pandemic put America on pause, contractors have been worrying about the prices of building materials. The Trump Administration's tarriffs in recent years have already disrupted the availability of materials like tile, steel, and aluminum products, among others. Coming into this year "building material prices" was the no. 1 concern among contractors.
Now, months into the pandemic, those fears are becoming reality as new estimates from the National Association of Home Builders show that a spike in softwoof lumber products prices has resulted in major price hikes in new single-family and multifamily homes.
There were some in the industry who hoped coronavirus would somehow help material prices, but a comprehensive look at lumber prices by NAHB—which included accounting for prices variances between sawmills, wholesalers, and retailer—discovered that what new home builders are paying for softwood lumber products skyrocketed between April in August.
In April, builders of single-family homes were spending about $17,000 on softwood lumber products per home, and multifamily builders were spending around $6,000. By August, those expenses had risen to $28,765 and $10,403, respectively. Over the same time, single-family home prices increased $14,116 and multifamily by $5,322. According to NAHB, the increase prices out about 2.1 million households from the market.
Builders use more softwood lumber than remodelers, so the impact of the increase will be less felt by remodelers. Still, with the pandemic expected to worsen in the colder months, it provides an ominous example of how quickly external issues (like a pandemic) can affect price. It's a reminder to keep a close eye on expenditures as businesses will need to be increasingly flexible as times get less predictable.