A consumer recently asked us about the current status of building materials for a new home. During the pandemic, many people who spent lots of time in their homes began noticing things they would like to improve. In fact, both home renovation contractors and home improvement retail stores saw skyrocketing revenues during the pandemic. Like many during the pandemic, this consumer thought about starting a new home build. However, they were somewhat concerned over reports they had heard about construction material shortages and high prices. So here's what you need to know about COVID-related construction supply shortages and delays.
A Lockdown Ripple Effect
Early in the pandemic, many businesses, even essential services, had to shut down. And when they opened back up, many were still feeling the effects of worker shortages and general delays. One sector that has a direct impact on the home construction industry is sawmills. With temporary shutdowns and worker shortages, many mills experienced shortages and delays producing lumber, a critical construction material. The boom in home improvement projects further compounded this. In fact, lumber prices have nearly tripled compared to before the pandemic.
A similar story is true for many other construction supplies. Even a brief shutdown can have a strong ripple effect, causing severe backups in production. In addition to manufacturing delays, many supplies were held up due to shipping issues. As travel was curtailed and businesses shuttered, many shipping companies were forced to delay delivery and downsize their operations. Supplies ranging from appliances to building materials were stuck on ships or at docks, waiting to be unloaded. The full shipping vessels had to wait to unload, causing further delays at factories where their products could not be loaded onto waiting ships.
The Effect on New Home Builds
The effect on home builds has been a classic case of supply versus demand. As demand has gone up and supply has remained low, prices have skyrocketed. As we mentioned, lumber has tripled in price. Other new home necessities such as glass, metal, and appliances have also become more expensive. And new home builders are not the only ones increasing demand. Homebuilders are in competition for these products with home renovation contractors and homeowners making improvements to their homes. Appliances, especially high-end appliances, are often out of stock. Backorders are common.
All of these shortages and delays come with a price tag. Building a new home costs, on average, $24,000 more compared to the same home pre-COVID. And as new housing becomes more expensive, the market in existing homes has also tightened. So if you're ready to sell your home, now may be a good time. Just make sure you have another home lined up to move into since building a new home or finding an existing one may be challenging.