In our last post, we explained why the prices of many construction materials are still on the rise more than a year after the COVID-19 pandemic first disrupted production Also; we describe best climate change resilient building material for new build custom home. Inflation caused by a flood of new money in the US economy, high gas prices, a shortage of shipping containers and a worsening labor crisis all impacted prices. Extreme weather events like Hurricane Ida and Winter Storm Uri as well as outbreaks of infections caused by emerging COVID-19 variants also contributed to sky-high costs. Lastly, surging demand for new houses and home improvements placed intense pressure on a supply chain that was already struggling. All these factors have contributed to higher costs for brick, insulation, appliances, fertilizer, appliances, concrete, copper, cement and many other building materials. On the heels of our article “Why Are the Costs of Building Materials Still Fluctuating?,” we take a look at six building materials experiencing fluctuating prices in 2021. From house paint to concrete, follow below to learn exactly why the prices of these specific construction materials are still in flux.
We mentioned in our latest post “Why Are the Costs of Building Materials Still Fluctuating?” that the supply of raw materials used to formulate house paint was disrupted during the winter and summer storms that struck the Southern US in 2021. In her October 2021 article “Experts predict a paint shortage in the U.S.—here's where to buy it before it sells out” for USA Today, Amanda Tarlton writes that the house paint industry was deeply impacted by Winter Storm Uri and Hurricane Ida. Tarlton notes that the industry is still “struggling to keep up with high demand” after Winter Storm Uri and Hurricane Ida “halted production of some of the key chemicals and resins needed to make paint.” Quoting Sherwin-Williams’ CEO John Morikis, Tarlton writes that “‘the persistent and industry-wide raw material availability constraints and pricing inflation...have worsened.’” Unfortunately for new home builders and renovators, Morikis “‘does not expect to see improved supply or lower raw material pricing in [their] fourth quarter as anticipated.’”
Buss Paints owner Randy Moser agrees with Morikis. Quoted by Jeff Cox in his September 2021 article “Paint is getting costlier and harder to find, and this could be just the beginning” for CNBC, Moser notes that his shop has seen “‘multiple price increases across the board from every manufacturer [they] deal with.’” According to Moser, “‘it’s been this way for a while now, and it seems like it’s not going to get any better over the next three to six months, either.’” The cost of house paint has indeed skyrocketed in the last few months. Cox writes that “producer prices for painting and coating manufacturing rose 10.6% in August from a year ago” in 2020. This represents “the biggest annual jump since January 2009.”
In addition to house paint, Winter Storm Uri is also partially responsible for the shortage -- and ensuing high prices -- of plastics used in new home construction and home improvements. According to Mary Meisenzahl in her August 2021 article “Restaurant owners describe the cutthroat competition for plastic cups and takeout containers as shortages continue” for Business Insider, “the plastics supply chain has been disrupted since the beginning of the COVID-19 pandemic, [but] the storms in Texas that caused blackouts and damaged businesses and homes across the state last winter also shut down chemical plants, stunting the supply of resin, which is used to produce plastic.” Kevin Crowley supports Meisenzahl’s claim in his March 2021 article “Plastic Prices Hit Record High to Stoke Inflation Concerns” for Bloomberg. Crowley writes that “more than 60% of U.S. PVC was still offline nearly a month after freezing weather hit Texas and Louisiana and decimated the power grid.” Storms from last year’s hurricane season had already crippled the plastic supply chain before Winter Storm Uri even hit the South. In March, Crowley predicted that these “supply shortfalls [would] have knock-on effects both domestically and around the world.” Months later, the cost of plastic products is still rising.
The cost of PVC -- used in electrical and plumbing -- has shot up to record highs over the last nine months, as has the price of epoxy resins and ethylene. In her October 2021 article “Soaring raw plastic prices affecting all consumers” for KRIS 6 News in Corpus Christi, Texas, Victoria Balderrama writes that “the price of PVC used for pipes, medical devices, credit cards, vinyl records and more, has skyrocketed by 70%.” Additionally, “the price of epoxy resins utilized for coatings, adhesives and paints has soared 170% and ethylene...has surged 43% in the past year.”
Plastics like acrylic, composites, polycarbonate, expanded polystyrene, polypropylene and polyvinyl chloride (or PVC) -- are ubiquitous in new home construction. Foam insulation, plastic-fiberglass insulation, plastic screws, plastic hinges, plastic pipes, plastic cables, plastic flooring and more are used widely in residential construction. Some builders even use plastic throughout the structure of the home and in the house’s roofing materials.
Perhaps the most famous example of a building material affected by the COVID-19 pandemic, lumber has also suffered from wild price-per-unit swings. In her April 2021 article “Fact check: COVID-19 to blame for spike in lumber prices, not Biden” for USA Today, Adrienne Dunn references a report from the National Association of Home Builders or NAHB. According to the report, escalating lumber prices are due largely to “‘insufficient domestic production.’” Dunn notes that “like other products, lumber prices surged amid the pandemic as mills were forced to close or slow production.” She explains that “pandemic home improvement projects, mill production cuts and this year's building season have caused an increased demand for lumber while supply remains low, leading some experts to predict prices will stay high.” Though lumber prices fell during the summer, they started climbing again a couple months ago.
Lumber’s most significant price jump occurred between April and May of 2021. In his July broadcast “What The Rise And Fall Of Lumber Prices Tell Us About The Pandemic Economy” for NPR’s Morning Edition, Scott Horsley notes that “lumber prices soared from $349 per thousand board feet in April 2020 to $1,514 this May.” Lumber prices began to cool off shortly thereafter as the pandemic abated and “do-it-yourselfers have found other ways to spend their weekends.” Between early June and mid July when Horsley’s broadcast was released, demand amongst both homeowners and professional homebuilders for lumber fell. According to Horsley, professional homebuilders tapped the brakes “in part because it's taking longer to get appliances and doors and other building materials.” Due to decreasing demand, “the composite price index compiled by Random Lengths tumbled by 50% to $770 per thousand board feet” this past summer.
Of course, lumber prices are now on an upward trend once more. In his October 2021 article “Lumber prices are on the rise again after a brief reprieve this summer, adding to concerns of lingering inflation” for Markets Insider, Matthew Fox explains why. According to Fox, “while lumber prices are still 60% below their record high, they are well above pre-pandemic levels.” In fact, as of October, “lumber prices are still 70% higher than their pre-pandemic levels of around $400 per thousand board feet.” Fox writes that “the integral homebuilding material has surged about 50% from its mid-August bottom of $448 per thousand board feet...after falling about 60% from a record high of $1,733 in early May.” He credits this to “supply chain disruptions and an insatiable demand for homes,” which have both driven “an incredible boom and bust cycle for the commodity.”
Unfortunately for aspiring homeowners, a recent National Association of Home Builders (NAHB) report “found that lumber's price surge added an average $36,000 to the cost of building a new home.” Naturally, buyers and builders both want to know for how much longer lumber costs will remain high. In his October 2021 article “Lumber Prices Start to Rise Toward What Might Be a New Normal” for GlobeSt.com, Erik Sherman writes that the high prices could be around for a while. Quoting Bryan Shaffer of George Smith Partners, Sherman writes that “‘the $500 to $600 range is going to be more the new normal for at least the next 12 months.’”
Aluminum, copper and steel are all used widely in both residential and commercial construction. The prices of each of these metals have fluctuated during the COVID-19 pandemic. The October 2021 Forbes article “Amidst Stock Downgrade And Steel Price Drop, How Is U.S. Steel Stock Coping?” notes that “steel prices recently reached historic highs” but started to dip slightly last month. According to Forbes, “hot-rolled coil prices peaked at $1,995 per ton in September 2021 from a low of $440 per ton in August 2020.” However, steel prices recently fell “to an average of $1,950 per ton, mainly due to China controlling steel production to reduce carbon emission.”
Copper and aluminum prices have also fluctuated over the last year. The Forbes article “Aluminum Price Nearing $3,000 – What’s The Impact On Alcoa Stock?” from October 2021 points to “a significant rise in global aluminum price, which was just shy of $3,000/ton” last month. Over the last six months, “the price of aluminum per ton has gone up from $2,250 to $2,958.” This reflects a cumulative “rise of over 30%.” In fact, according to Eric Onstad and Eileen Soreng in their article “Copper to extend slump in 2022 as mines ramp up, China weakens” for Reuters in late October 2021, “aluminium is the second best performing base metal on the LME” or London Metal Exchange. According to Soreng and Onstad, aluminum prices have climbed “nearly 50% so far this year and are touching 13-year highs.” The meteoric rise of aluminum prices has been “fuelled by strong demand and production cutbacks in China due to power issues.”
Onstad and Soreng also note the fluctuating cost of copper. They write that “benchmark copper soared to a record peak of $10,747.50 a tonne in May, but has retreated about 10% since then, weighed down by weak Chinese factory output, debt problems in the property market and an energy crunch.” A recent Reuters poll expects copper prices to “extend their decline next year from record levels touched in 2021 as mine supply ramps up and economic growth tapers in top market China.”
Resistant to corrosion, aluminum is often used in the exterior of both commercial and residential buildings. Home builders may use aluminum in the facades of houses, in interior walls, in roofs, in doors, in windows, in built-in shelves and in staircases. Aluminum is also found in wiring and in ducts for HVAC systems. Copper is most commonly used for plumbing and electrical systems because it is easy to mold and solder. In addition to run-of-the-mill plumbing, copper pipes and tubing are often found in home HVAC and potable water systems. Lastly, steel -- both new and recycled -- is used as a roofing, framing and cladding material in home construction. Because it is durable and incredibly strong, carbon and stainless steel has taken the place of timber in many new homes across the US and abroad.
Across a wide variety of industries -- from the automotive industry to the fine wines industry -- producers, retailers and consumers are all facing a glass shortage. In her June 2021 article “How prices for 5 major homebuilding materials have changed during COVID-19” for the Gwinnett Daily Post, Madison Troyer writes that “even before the pandemic hit, a glass shortage already existed, edging prices higher bit by bit.” Now that we are more than a year and a half into the pandemic, “that raw materials shortage has only grown, driving prices further up.” Troyer attributes this to a number of causes -- from high demand to the increasing cost of natural gas and other sources of energy. According to Troyer, “glass-making is a difficult process that involves keeping furnaces running continually; when stay-at-home orders shut down production lines it also created backups that forced customers to wait for months to have their orders filled.”
A global shortage of shipping containers -- which we explained in our last post -- is also impacting the cost and availability of glass worldwide. In a broadcast for The Denver Channel -- an outlet of ABC News -- CEO of Distillery Products Jane Sciacca notes that it “usually takes five weeks” to have glassware “shipped from overseas [but] now, it takes three months and costs more.” Unfortunately, glass is used widely in new home construction. In addition to windows and doors, glass is also used as insulation, as flooring, as cladding and as a structural component in many American houses. Because everyone from restaurateurs to construction workers are struggling against the resultant price increase, Troyer writes that “builders would be better off using less glass (especially in places like front doors that could do without it) for the next year or so.”
Last on our list of affected building materials is concrete. In his November 2021 article “Building Materials Prices Post Record Year-To-Date Increase through October” for the NAHB’s Eye on Housing report, David Logan writes the Producer Price Index or “PPI for ready-mix concrete (RMC) gained 0.6% in October after falling 0.5% in September.” According to Logan, “the index for RMC has risen 6.4% since January 2020 and 4.8% YTD.” This change represents “the largest year-to-date increase in October since 2006.” Unfortunately for home builders, the Producer Price Index “for gypsum products increased 2.1% in October” as well. This represents “the eighth consecutive monthly increase” in gypsum prices.
While the prices of gypsum products actually “fell 3.3% between January and October 2020, the index has increased 25.7% in the months since.” Writing for GlobeSt.com in his October 2021 article “Lumber Prices Start to Rise Toward What Might Be a New Normal,” Erik Sherman writes that “gypsum building materials are at an all time high, at least since 1994.” Concrete and gypsum are used widely in construction, featuring heavily in everything from drywall and ceilings to portland cement and pavers.
In our recent post “Why It’s Important to Hire a Design-Build Firm to Save Money Before Construction Starts,” we explained how design-build firms help homeowners navigate the complex building materials market. Lee Wallender notes in the article “Pros and Cons of Being Your Own General Contractor” for The Spruce that a design-build firm that “has an extensive contact list of masonry pros, carpenters, electricians, plumbers, HVAC contractors, landscapers, and house painters is worth more than you can imagine.” This long list of professional relationships helps design-build firms secure access to -- and possible trade discounts for -- building materials, finishings and other elements of custom home builds.
On the other hand, Justin Pierce writes in his article “Think you can save by being your own general contractor?” for The Washington Post that homeowners typically “way overspend on materials” because they “have to select and purchase thousands of items...from big box stores.” Homeowners tend to underestimate the amount of time, energy and money involved in a custom build. Practiced design-builders like Element, however, “consider cost and time at every corner of the planning and construction process." To avoid overpaying for construction materials while building your new custom home, reach out to the team at Element here.
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