Building Material Costs Surpass Records
August 17, 2021
Prices for building materials have climbed 19.4% over the last 12 months, increasing 13% in 2021 alone, according to Bureau of Labor Statistics data.
Buyers are seeing the results in the prices of new homes. The median sales price for a new home was $361,800 in June, up 6% compared to a year earlier.
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.
Softwood lumber decreased 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 reports. Price volatility in lumber has not helped market costs, however. Read more: Plummeting Lumber Prices Little Help to Builders
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. Read more: Flooded With New Orders, Builders Limit Sales
“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.
“Building Material Prices Climbing at Record Year-to-Date Pace,” National Association of Home Builders’ Eye on Housing blog (Aug. 12, 2021); “Rising Cost of Steel, Lumber, and Copper Is Hampering Homebuilding—and Pushing House Prices Out of Reach,” NBC News (June 16, 2021)
Updated: September 24, 2021