Ryan Dezember and Marco Quiroz-Gutierrez over at The Wall Street Journal look at the skyrocketing price of commodities.
Lumber prices have gotten a lot of attention which makes sense because it is one of the biggest costs in home-building. Lumber is up more than twice the typical price for this time of year. Lumber, however, is not alone as Dezember and Quiroz-Gutierrez explain…
- “Crude oil, a starting point for paint, drain pipe, roof shingles and flooring, has shot up more than 80% since October. Copper, which carries water and electricity throughout houses, costs about a third more than it did in the autumn.”
- “Prices for granite, insulation, concrete blocks and common brick have all pushed to records in 2021…Drywall and ceramic tiles are short of records but have also climbed.”
Complicating matters was COVID-19. Building supply chains, like most industries, weren’t prepared for the pandemic. It not only shut down factors, but it increased some people’s pocketbooks and free time causing a rush on supplies while production had come to a halt.
The good news is these price hikes have been absorbed by low mortgage rates and The Fed. “Rock-bottom mortgage rates have made owning a house more affordable, while the Fed’s purchasing of mortgage-backed securities has spurred lending. Lower household spending during the lockdown and federal stimulus checks have helped people accumulate down payments.”
Unfortunately, rates have been begun a move upward meaning these upticks can no longer go unnoticed. “The National Association of Home Builders says that rising lumber prices have added $24,000 to the cost of building the average single-family home and about $9,000 per apartment. The lobbying group last week asked Commerce Secretary Gina Raimondo to seek immediate remedies to boost production.”