Some Builders Say Lumber Costs Put Their Businesses at Risk
An 80% year-to-year increase in lumber prices hurts buyers, but it’s also starting to put some builders in a precarious situation due to construction delays and higher costs.
ORLANDO, Fla. – According to Associated Builders & Contractors Inc. (ABC), as of March 12, softwood lumber saw a 79.7% year-over-year increase. Other material costs have gone up as well, though not as dramatically.
Local contractors in the Orlando area say prices hit record highs in recent weeks, and the coming months will be critical for some Orlando-area home and apartment builders hammered by increasing lumber costs due to lower supply and higher demand. Wood is essential for building in Central Florida as the material is inexpensive and can hold up in the region’s weather.
The increase in wood costs has been so severe in Orlando that some projects have been canceled or delayed, which has further strained the area’s tight residential market. The market continues to feel the pressure from increased population growth, and the costs will likely reduce the appetite to build much-needed affordable housing.
According to ABC’s Construction Confidence Index, nearly two-thirds of contractors expect their profit margins to decrease over the next six months.
Two ways to lower lumber’s price include persuading mills to increase production and eliminating or reducing tariffs on Canadian lumber, said Ron Whalen, vice president of Altamonte Springs-based contractor Roger B. Kennedy Construction Inc.
Source: Orlando Business Journal (03/24/21) Witthaus, Jack
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