This is an exciting time for the home building industry. Demand for new homes in the DC metro area and around the country is booming. While this is an excellent problem to have, it presents challenges for both builders and consumers.
With the increased demand for housing comes increased demand for labor and materials accompanied by increases in their costs. Additionally, a dwindling labor force, government tariffs and regulations, increased transportation costs and now, increasing interest rates are combining to push the costs to build a new home beyond the reach of many buyers.
While material and labor costs have driven many builders to increase their prices multiple times over the last few of years, Classic Homes of Maryland has leveraged its relationships in the industry and increased them once. Our price increases also included upgrades to our standard specifications permitting us to continue our long tradition of providing customers with the best value per dollar.
In the past, builder’s locked in the cost of raw materials for extended periods of time. Unfortunately, this is no longer the case, as it is not uncommon to receive quarterly or even monthly increases. When we receive increases this frequently we must consider increasing our prices as well.
We will be posting a series of articles focusing on the challenges the homebuilding industry faces. Today’s post addresses the rising and unpredictable cost of lumber and its impact on the industry. These increases not only affect the cost of framing materials, roof trusses, and engineered floor systems but other products used in the home as well. Some products affected include cabinets, trim material, interior and exterior doors, and hardwood flooring. Cumulatively, these products represent a large percentage of the materials used to build a home and their associated costs.
With lumber prices at record highs this year, there is plenty of uncertainty for builders and buyers alike. Recently imposed US tariffs on Canadian imports, wildfires in Canada, and transportation limitations have all contributed to rising prices. With low supply, high demand, and the rising cost of imported lumber, domestic producers are scrambling to increase their output capacity. If successful, increased domestic lumber production will reduce the demand for foreign imports but will not provide price relief for builders and purchasers.
Future posts will cover the rising costs of materials, trucking/transportation, and labor.