New-Home Costs Skyrocketing – and Not Just Due to Lumber
While lumber costs deserve a lot of the blame for the rising price of new homes, other things – crude oil (paint), drywall, ceramic tile – are also more expensive.
NEW YORK – The U.S. Bureau of Labor Statistic’s producer-price index reveals record prices for granite, insulation, concrete blocks and common brick for 2021. And as the prices for raw materials used to build homes rises, so do the costs of homes and home improvement projects.
Lumber, one of the biggest costs in homebuilding after land and labor, has never been more expensive at more than twice the typical price for this time of year.
Crude oil, a starting point for paint, drain pipes, roof shingles and flooring, has shot up more than 80% since October.
Copper – used for waterpipes in many homes – costs about a third more than it did in the autumn. Drywall and ceramic tiles are short of record prices but have also climbed.
The National Association of Home Builders says rising lumber prices alone have added $24,000 to the cost of building the average single-family home and about $9,000 per apartment.
On the plus side, rock-bottom mortgage rates have made homeownership more affordable, and lower household spending during the lockdown and federal stimulus checks have helped people accumulate down payments. Many, however, went on a remodeling bender further straining the U.S. supply of building materials. Overall, Americans pocketed $152.7 billion from cash-out refinancings last year.
Due in part to the remodeling, building suppliers dealt with slowdowns during the lockdowns, but they haven’t been able to catch up, especially since building permits for residential construction are being issued at the highest rate since 2006.
Source: Wall Street Journal (03/17/21) Dezember, Ryan; Quiroz-Gutierrez, Marco
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