Real Estate Marketing & Beyond
Building material costs have jumped by almost 20% in the last 12 months, and by 135 in 2021 alone, according to new data from the Bureau of Labor Statistics.
The prices rises are putting pressure on home builders, who in turn are raising their prices. Buyers have seen new home prices rise to a median of $361,800 in June, up 6% from a year before.
The astonishing rise in the price of softwood lumber has been well documented, but other building materials have seen similar gains in price.
For instance, steel mill product prices increased 10.8% in July following a 6.2% increase in June. Prices have increased 108.6% over the past year and 87.6% in 2021. Tariffs on steel imports have been blamed for adding to building costs.
Prices for gypsum products, which are used for drywall, rose 2.5% in July and are up nearly 16% in 2021. Copper has also been in short supply, builders report.
The price of lumber did actually fall 29% in July, which marks the largest monthly decline in records dating back to 1947. The decrease follows on the heels of falling lumber prices that started in mid-May. Softwood lumber has dropped nearly 30% since its peak but remains 71.9% above January 2020 levels, the National Association of Home Builders reported. Price volatility in lumber has not helped market costs, however.
The NAHB says that higher costs for softwood lumber and other building materials based on declining availability are driving up the price of new homes. Some builders are even halting new orders because of the difficulty of pricing projects.
“New residential construction remains strong, but building material pricing and availability are likely to remain significant headwinds,” Charlie Dougherty, an economist at Wells Fargo, told NBC News.
