U.S. Senators Jerry Moran and Jeanne Shaheen, along with U.S. Secretary of Commerce Gina M. Raimondo recently met virtually with stakeholders involved in the home building supply chain, including the lumber industry, affordable housing advocates and the home building industry. The group discussed supply chain disruptions, recent price volatility, the shortage in availability of homes and potential areas for cooperation among stakeholders.
Costs due to the price of materials continue to mount for new homes being built, as the National Association of Home Builders (NAHB) reported that changes in price for softwood lumber products that occurred between April 17, 2020 and July 8, 2021 have added $29,833 to the price of an average new single-family home.
“Runaway construction cost growth, such as ongoing elevated prices for oriented strand board that has skyrocketed by nearly 500% since January 2020, continue to put upward pressure on home prices,” said NAHB Chairman Chuck Fowke. “Policymakers must address supply chain bottlenecks for building materials that are raising costs and harming housing affordability.”
Tommy Bickimer with Home Builders Association of Kansas City, and Lindsay Hicks of Habitat for Humanity of Kansas City also participated in the roundtable discussion to share how the increase in lumber prices has impacted housing construction.
“The volatility in the lumber market is pricing hundreds of thousands of potential homebuyers out of achieving the American dream of homeownership,” said Senator Moran. “Supply chain shortages caused by the pandemic have driven up the price of building and buying homes, and the threat of increasing countervailing duties on certain lumber imports from Canada threaten to exacerbate the situation. I appreciate the partnership of Senator Shaheen and Secretary Raimondo’s willingness to engage with industry leaders within the supply chain, including Kansas stakeholders, as we work to address the nationwide high cost of lumber and make the dream of homeownership attainable for all Americans.”
Supply chain issues, compounded by tight inventory and high demand, is sending home prices to record new highs not seen since in 40-plus years.
“The COVID-19 pandemic had an unprecedented impact on the home building supply chain,” said said Sen. Shaheen. “Challenges like supply bottlenecks and skyrocketing demand for construction materials resulted in surging prices and harmed the supply chain–affecting timber harvesters and haulers, sawmills, retail stores, home builders, and ultimately, Granite State families who need a safe and affordable place to live.”
According to CoreLogic’s latest Home Price Index (HPI) and HPI Forecast for June 2021, home prices increased 17.2% compared to June 2020 nationwide, a rate not seen since the late-1970s. On a month-over-month basis, home prices increased by 2.3% compared to May 2021.
“Home prices have been rising in the mid-single digits for some years now. The recent surge to double-digit price jumps reflect the convergence of exceptional demand and persistent low supply,” said Frank Martell, President and CEO of CoreLogic. “With plenty of cash on the sidelines, along with very low mortgage rates, prices are heading up and affordability will become a more acute issue for the foreseeable future.”
Secretary Raimondo noted, “It is going to take collaboration among stakeholders to sort out bottlenecks and further strengthen the supply chain. We also need to directly grow our supply of housing in America, which is why the President has called for a historic investment to create and preserve more than two million affordable and sustainable homes.”