Building Material Prices Surge
Material Supply Chains Struggle to Meet Demand
Construction material prices are spiking. Demand for new homes and home renovation remains strong, so builders are passing these material costs on to buyers.
For much of the pandemic, mortgage rates have hovered at record lows. Americans have been buying new homes or have been refinancing and then remodeling. Though interest rates are beginning to rise and analysts expect that the housing market may cool down soon, building material supply chains are still playing catch-up after a year of surging demand and shut downs of sawmills and oil wells last year.
Lumber, Crude Oil, and Copper Prices Climb
The cost of lumber is currently more than double what is typical for this time of year. Lumber is one of the primary costs when building a home aside from labor and land. Crude oil, which is used to make paint, drain pipes, shingles, and other materials, is 80% more expensive than it was in October.
Copper, which is used for pipes and electrical wiring, is about 33% more costly than it was in the fall. Prices for other home-building necessities from insulation to bricks to drywall are also surging.
Sherwin-Williams and Other Suppliers Raise Prices
In order to stay profitable as the cost of building materials rises, suppliers are raising their prices. This has translated to higher price tags on homes and renovations.
Paint company Sherwin-Williams (SHW) and flooring manufacturer Mohawk Industries (MHK) have been raising prices. Builders like D.R. Horton (DHI) and Hovnanian Enterprises (HOV) have been doing the same. It’s been an unpredictable year for the housing industry and more changes could be coming, but for the moment many consumers are still eager to buy and remodel homes and are willing to pay these higher costs.
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