Monday, May 13, 2013

Building Material Prices Continuing to Climb

Since Jan. 1, on average, builders said, their drywall prices have surged by 30 percent, lumber prices are 15 percent higher, and concrete and flooring costs are up 5 percent.

Other building supplies are going up, too. Prices for siding and windows made from PVC, a petroleum byproduct, have gone up an average of 7 percent this year.

Louisiana-Pacific Corp., the Nashville-based building products company, reported earlier this week that it saw an 82 percent increase in average first-quarter prices for its oriented strand board, or wood-particle board. Those prices are set on futures markets.

Builders and industry officials say three key factors are driving prices higher:
  • Greater demand. U.S. housing starts have grown by nearly 50 percent in the 12 months ended in March, pushing new home construction past the one million mark for the first time since 2008. Permits also are at a five-year high.
  • Supply limitations. Producers of drywall, concrete and other construction materials shuttered plants and reduced production during the housing slump. Those facilities are only now starting to come back online, at a fraction of their previous capacity.
  • Labor issues. The homebuilding industry has lost nearly 40 percent of its workers since the housing boom’s peak in 2006. Subcontractors are again in hiring mode, but many workers who left the industry or the country are unlikely to return.

 All that has added $10,000 to $15,000 ($4-6 per sq ft) to the cost of a typical 2,500-square-foot single-family house.

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