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Construction materials shortage and pricing pose problem

Construction materials shortages and pricing fluctuations as a result of the pandemic are a continuing challenge for the industry. As supply chains are impacted, shortages are expected well into the year.

Construction materials shortage and pricing pose problem

Lumber prices are a major issue, sending ripples through the industry. The National Association of Home Builders is speaking out as the prices of lumber hit a record this month, in some cases more than doubling the cost of building a new home. This has caused buyers to rethink their purchases and builders to put projects on hold. As NAHB Chairman Chuck Fowke, a custom home builder from Tampa, Fla., says in the association’s February 12 press release,

“According to [wood industry publication] Random Lengths, the price of lumber hit a record high this week and is up more than 170 percent over the past 10 months. NAHB is urging President Biden and Congress to help mitigate this growing threat to housing and the economy by urging domestic lumber producers to ramp up production to ease growing shortages and to make it a priority to end tariffs on Canadian lumber shipments into the U.S. that are exacerbating unprecedented price volatility in the lumber market.”

A silver lining may be that contractor confidence in Q4 is up slightly from Q3 – with the Commercial Construction Index increasing by two points to 59 from 57 – according to the recently updated U.S. Chamber of Commerce Commercial Construction Index – 2020 Q4 report. The overall score is still well below the pre-pandemic score of 74. However, construction material shortages and pricing concerns are top-of-mind for contractors. Among the report’s findings:

  • 74% of contractors indicate construction materials pricing fluctuations have a moderate to high impact on their business. This figure is up 11 percentage points from the previous quarter.
  • 41% of contractors say less availability of building products and materials is a severe consequence of COVID-19.
  • 31% of contractors report a current lumber/wood shortage, up from 11% last quarter.
  • 24% are saying steel and aluminum tariffs will have a high degree of impact on their business in the next three years.
  • Of those who mentioned that the fluctuation in building and material costs have a considerable impact on their business, 61% said wood/lumber is the product of most concern, followed by 11% for steel, as well as 11% for electrical products other than copper wire, and 10% for lighting products.

“The pandemic has exacerbated issues contractors were already facing in availability and cost of materials from tariffs and a shortage of skilled workers,” said U.S. Chamber of Commerce Executive Vice President and Chief Policy Officer Neil Bradley. “But there’s reason for optimism. More than one in three contractors plan to hire more workers in the next six months, and most see sufficient new business in the coming year.”

The increase in extreme weather has also contributed to the shortage issue. In a recent press release, Noe Teniente, branch manager of Texas-based Budget Roofing Supply states,

“Manufacturers are facing COVID-19 as well. They’ve had to reduce staff per shift as well as extend production hours. Not to mention the surge of orders from regions that have encountered hurricanes as well as hail storms. Due to that surge, we now have to fight for allocation of materials.”

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