New home construction crashed after the housing bubble popped in the mid-2000s. Today’s shortage has roots in the previous housing boom. We have tens if not hundreds of thousands of dollars stolen during the year,” said Chesson, the North Carolina builder. The shortage - and price boom - is so extreme that builders report having lumber and other raw materials stolen from their construction sites. The NAHB estimates that the lumber price spike has added nearly $12,000 to the market value of an average newly built multifamily home - translating to households paying an extra $119 per month to rent a new apartment. McCarthy estimates the cost of lumber for the home will hit $70,000, nearly double the cost of building the exact same home in a nearby town just eight months ago. “There are pieces of wood that we can’t find,” said McCarthy, a real estate broker with the Chen Agency who also builds homes with his father on the side. There is no inventory.' Housing industry veteran marvels at real estate boom Photographer: Luke Sharrett/Bloomberg via Getty Images Luke Sharrett/Bloomberg/Getty Images Census Bureau is scheduled to release housing starts figures on March 17. Tom McCarthy can’t finish building a home in Bergen County, New Jersey because of the lumber shortage.Ī contractor walks past houses under construction at the Norton Commons subdivision in Louisville, Kentucky, U.S., on Monday, March 8, 2021. Independent builders, which lack the scale advantages of large construction companies like KB Home, are already feeling the pain. The median sale price of existing homes surged by a record 17.2% in March to $329,100 - the highest since the National Association of Realtors began tracking prices in 1999. “This can only last for so long before affordability becomes pinched and demand pauses,” John Lovallo, lead home builders analyst at Bank of America, said in an email. Home prices hit a new record, because there simply aren't enough houses for the crush of buyersīut builders can’t jack up prices forever. Photographer: Johnny Milano/Bloomberg via Getty Images Johnny Milano/Bloomberg/Getty Images Across the U.S., house hunters are fighting for scraps in a market picked clean of listings during the key spring homebuying season. Vehicles parked outside residential homes in Manhasset, New York, U.S., on Friday, April 16, 2021. “It’s absolutely contributing to a shortage of housing,” he said. “I’ve never seen anything quite like this,” said Brant Chesson, the president and CEO of Homes By Dickerson, a Raleigh, North Carolina-based home builder.Ĭhesson said his company would love to build more homes to meet surging demand but currently it can’t find the materials, or labor, to do so. While lumber prices have gone up, we have been able to pass it on to the consumer with higher prices for homes.” That’s a big deal because lumber is the most substantial supply that home builders buy. Random-length lumber futures hit a record high of $1,615 on Tuesday, a staggering sevenfold gain from the low in early April 2020. The shortage is delaying construction of badly needed new homes, complicating renovations of existing ones and causing sticker shock for buyers in what was already a scorching market. The slump never arrived and now there isn’t enough lumber to feed the red-hot housing market. Other issues inflating lumber prices include ongoing supply chain disruptions, tariffs on Canadian lumber imports and an unusually strong wildfire season in the American West and in British Columbia.As the pandemic crushed the US economy last spring, sawmills shut down lumber production to brace for a housing slump. Compared to the increase in housing starts, sawmill output is significantly behind. Sawmill output dropped at the start of the pandemic and while it has recovered some, it is still plagued by labor shortages. There are several reasons behind the inflation, but it's mostly that sawmills can't keep up with demand. "With a historically low level of overall housing inventory and solid demand due to low mortgage interest rates and favorable demographics, new construction has been unable to add additional needed supply to the market, resulting in unsustainable gains for home prices," wrote David Logan, director of tax and trade analysis at NAHB. NAHB calculated these average home price increases based on the softwood lumber that goes into the average new home, as captured in the Builder Practices Survey conducted by Home Innovation Research Labs.
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