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Tags: lumber | construction | homes | inflation | money

Report: Rising Lumber Cost Adding $19K to Home Construction

Lumber for sale at a Home Depot. (Joe Raedle/Getty Images)

By    |   Tuesday, 15 February 2022 05:39 PM EST

The soaring price of lumber is increasing the cost of a new home by almost $19,000, CNBC reported Tuesday.

The numbers, taken from the National Association of Home Builders, showed a 24% increase in the cost of lumber used to build new housing, a sharp rise after falling back a bit in January.

According to the Bureau of Labor Statistics on Tuesday, final demand for products and services increased by 1% in January, following increases of 0.4% in December 2021 and 0.9% in November, rising 9.7% for the year.

Fueling the increases in the home market include the availability of building materials including lumber and paint, which 91% of builders see as being a top problem for 2022, including the time it takes to get the materials, according to the NAHB.

According to the NAHB report, 90% of builders expect rising inflation to remain a problem in 2022, compared with 63% who felt that way last year.

What this means for consumers is that the cost to buy a new home is up more than $18,000 for a single-family house and about $7,300 to the cost of multi-family construction, translating to an increase in monthly rent of around $67 for new apartments, the CNBC report said.

"With a historically low level of overall housing inventory and solid demand due to low mortgage interest rates and favorable demographics, new construction has been unable to add additional needed supply to the market, resulting in unsustainable gains for home prices," David Logan, director of tax and trade analysis at NAHB, wrote in the CNBC story. 

With the price increases, the NAHB found that each $1,000 of increased home construction costs can price about 117,932 families out of the housing market with 87.5 million, or 69% of U.S. households, already unable to buy a $412,505 median-priced new home.

The organization found more than 360 metropolitan areas around the country where the $1,000 increase forces tens of thousands out of the housing market.

Another factor in the increased cost of new homes is the fees, and regulations on the construction industry that cost buyers as much as an additional 30% if local approvals are needed for construction, the CNBC article said.

More buyers may also get cut out of the market as inflation drives up interest rates, with just a quarter-point increase driving 1.1 million households out of mortgage markets for new, median-priced homes, according to the NAHB.

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The soaring price of lumber is increasing the cost of a new home by almost $19,000, CNBC reported Tuesday.
lumber, construction, homes, inflation, money
Tuesday, 15 February 2022 05:39 PM
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