Dramatic rise in lumber, building materials costs slow construction

By James Mason
If you’re thinking of putting a new roof on the house, you may find the cost has gone through the roof. Prices of lumber and other building materials have increased dramatically across the nation and Nome has been hit along with the rest.
“We just put out a request for a proposal to build three homes in Shaktoolik and nobody could qualify,” said Eric Noet, construction manager at Bering Strait Regional Housing Authority. “They couldn’t come within our maximum price, which is very generous, and nobody could meet that.” Noet says building materials seem to be doubling in price and maybe doubling again within the next month or so. “We try to figure about $300 to $400 a square foot but now it might be double that,” he said of the cost to build in Shaktoolik.
Nationwide there’s a boom on in new-home construction. Wood accounts for about a third of the cost of materials in a new home. According to Crow Publications, an industry newsletter in Portland, Oregon, wood products building materials are at historical highs. They cite plywood as up 90.3 percent over a year ago and lumber used in framing up as much as 65 percent. As the construction season in the Lower 48 starts earlier than Nome, costs are even higher by the time the season starts here.
Low interest rates for mortgages and other home loans have kept the housing market running strong. As monthly payments have remained low, consumers have been able to absorb the higher costs of construction. But eventually high costs will cool the housing market.
Nome contractor Clif McHenry has seen costs rise. “I’m doing a remodel, an addition, on my own house and I’ve seen a substantial increase over the past two or three years,” he said. “Lately, plus with the pandemic, I’ve had a difficult time getting specific materials. Like, my plywood was delayed substantially because it was a special pattern and for whatever reason it took longer to get it delivered up here. That stretched out my project.”
“We don’t do lumber or plywood, but anything made out of anything is going up,” said Keith Reddaway at Builder’s Industrial Supply in Nome. “Plastic, metal, and copper, everything is going up. Especially plastics. With fittings, there’s a percentage where things are not available for any price.”
Are buyers who come in shocked at the prices?
“I don’t know if shocked is the word,” said Reddaway. “Everybody is aware that something is going on. It’s more like incredulousness. Most people understand what’s going on, this situation. Very few understand why, they just know it’s going on.”  
Do people seem to be holding off on construction?
“Definitely. One fellow was in a couple of days ago and said he’s already had two jobs cancel out because of the cost of lumber. Plumbing and electrical and everything related is a similar issue,” said Reddaway.
Builder’s gets inventory by barge and by air freight. “We’ve done our barge orders to replenish for the summer but I haven’t seen any invoices,” said Clark Reddaway. “I don’t know what our landed cost is for things I did order that are on the barge.”
Outsiders Construction is the primary source of wood products, particularly plywood, in Nome. They declined to comment for the article. A call to Spenard Builders Supply’s Bush orders desk was referred to a spokesperson in Denver who also declined to comment on lumber costs.
Production of materials slowed during the COVID pandemic and now suddenly everybody is doing construction. “Everything went to a standstill and now all of a sudden everybody has the attitude ‘We’ve got to do something,’” said BSRHA’s Noet.
Clif McHenry, however, sees a decline in the amount of work being done in Nome. “In the last year or so there’s definitely been a decline,” he said. “It seems people don’t have the money to do some of the projects they want. They put them on the back burner.”
“The short answer is pandemic,” said Ken Simonson, chief economist at Associated Contractors of America, commenting on the reason for the cost increases. His weekly newsletter tracks construction costs. “The supply chain is still being affected in a number of ways.” Ships loaded with goods from China are backed up at Long Beach and other California ports because dock workers are out with COVID-19 and there’s nobody to handle the cargo. Global trade’s back and forth cadence has been affected by the pandemic and as a result there is a shortage of shipping containers in China. Lumber supply houses have been reluctant to order for fear that prices would drop and leave them with overpriced inventory. But high costs should spur production and bring prices back down. When that will happen is the big question, according to Simonson.

 

 

 

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