Prices for building supplies are at an all-time high across the nation, creating a ripple effect that is impacting home builders and buyers.
The cost of lumber, steel and other building supplies have surged in recent months across the U.S. Lumber costs alone are adding nearly $36,000 to the price of the average new single-family home.
Those in the home building business say projects are going way over budget, and many are getting delayed.
The sticker shock is unprecedented, according to the Producer Price Index. Officials say that index has been around for more than three decades, and the jump in costs between April 2020 and April 2021 is the highest increase the index has ever recorded.
“I guess the simplest, one-word answer is ‘pandemic,’” said Ken Simonson, chief economist with the Associated General Contractors of America. “That has caused just tremendous dislocations in the whole supply chain.”
In response, many future building projects have been delayed or canceled. Industry workers are also in short supply, by the tens of thousands, officials say.
All of the factors combined have triggered a bump in prices for potential homebuyers.
The construction industry hopes the squeeze on building supplies will be temporary. But, for now, those breaking ground on a new build may also be breaking the bank.