(National Association of Home Builders) Skyrocketing lumber prices and supply-chain challenges continue to slow home construction, even amid higher demand. Both new home sales and existing home sales have cooled as prospective buyers are priced out of the market.
As appraisals struggle to reflect these ever-rising costs, home owners and builders continue to look for opportunities to minimize the impact these prices are having on the overall cost of the home. But as they strategize, prices are only getting worse.
“I am trying to build my own home — we are general contractors — and the price of lumber has set us back twice,” Michelle Govro from Missouri explains. “My permits are waiting, but in the one month of waiting for permits, the price of our bids in lumber went up substantially.”
“We even redrew house plans and are trying to build a smaller 1,600-square-foot home, and the lumber price is outrageous,” she added.
Others, such as Angela Cross from New York, have been watching the market to try to build their home at a better time only to be met with continued disappointment.
The Cross family began their home-building journey in April 2020, with an initial quote from a contractor in July 2020 once their land had been surveyed. Lumber prices had begun to ramp up, so a final quote was prepared in September 2020. The price of their turnkey home jumped 20% in just those two months.
“That was over our budget at that time,” she notes, “and after discussing it with our contractor, we decided to wait until February 2021, as he was hopeful lumber prices would come down.”
However, lumber prices have continued to rise instead, and what had been a 20% increase in September had become a 38% increase as of April 2021. Like Govro, the Crosses have tried to find every opportunity to cut costs — including reducing the square footage from 1,656 square feet to 1,500 square feet, and exploring alternative construction methods such as modular — as they continue to rent a two-bedroom house with their two daughters. But the costs are still too high.
Even the existing home market isn’t providing any relief.
“The homes are either sold very quickly, or are out of our price range, or need so much work that it is not worth it to us,” she shares. “Especially since we now own our own piece of land and have dreamed of building our home.”
Problem with rising costs and supply chain challenges are only bound to make these issues worse, as they continue to complicate the home building process.