Shortage of key building materials
June 19, 2013, Wash. - Home builders and lumber dealers are reporting significant shortages of key home building materials like lumber and wall board, according to recent surveys by the NAHB and the National Lumber and Building Material Dealers Association (NLBMDA).
"Supply constraints are one of the barriers to a more robust recovery," said David Crowe, NAHB chief economist. "The shortages and price increases are concerning given that the current rate of construction is still far below what would be considered normal or necessary to meet underlying demand."
Among builders, the highest incidence of shortages was for oriented strand board (OSB), with 22 per cent of builders reporting shortages, followed by wall board (20 per cent), framing lumber (18 per cent) and plywood (18 per cent). The builder results come from special questions added to the monthly survey that serves as the basis for the NAHB/Wells Fargo Housing Market Index (HMI), which is widely viewed as a key indicator of the overall strength of the home building market.
With the exception of wall board, the lumber dealers reported greater shortages of these products than the home builders. Among lumber dealers, 27 to 28 per cent reported shortages of OSB and plywood, 36 per cent reported shortages of framing lumber and 12 per cent reported shortages of wall board. The dealer results come from a special survey of NLBMDA's members, who operate single or multiple lumber yards and component plants and deal in many of the same products that NAHB members purchase.
Both the builder and lumber dealer surveys asked about shortages of 24 specific building products and materials. For most of the products, the share of builders reporting a shortage was considerably higher in May of 2013 than in 2011 or 2012. The only exceptions were copper wire, vinyl siding, HVAC equipment, insulation and structural insulated panels.
"The shares of reported shortages are not as high now as they were in 2004 or 2005, but the increases since 2012 are quite significant, especially when you take the early stage of the housing recovery into account," said Crowe. "In 2004 and 2005 the home building industry was producing more than 1.8 million new homes a year, while the current rate of new housing starts is still below 1 million."
With the exception of concrete-related products, a larger share of lumber dealers than builders reported price increases in building materials over the past six months. On average, builders reported a 5.17 per cent increase in the materials that go into a house over the past six months. Most lumber dealers reported that the prices of the products they handle had increased on average by 10 per cent or more over the past six months.
The reported results reflect survey data collected from NAHB builders and NLBMDA dealers during the first half of May; 383 builders and 230 dealers provided responses.
Photo credit: APA – The Engineered Wood Association.