Why New Homes Are Getting Pricier
June 25, 2018
More than 90 percent of builders say that rising lumber prices are hampering the affordability of new homes, according to the National Association of Home Builders/Wells Fargo Housing Market Index. Recently surveyed builders say that the higher construction costs are causing more prospective buyers to back out of purchasing a new home as well.
Builders are blaming the rising construction costs on the increase in lumber prices over the past year and a half. (They also say a shortage of labor is having an effect.) Ninety-five percent of builders surveyed said that recent increases in lumber prices were hurting the affordability of their new homes, evenly split on whether it’s a “minor” or “significant” impact.
U.S. lumber prices have increased 62 percent since January 2017, according to Robert Dietz, the NAHB’s chief economist. He estimates that a lumber tariff has pushed up the typical new-home price by $9,000.
Shortages of framing lumber are widespread, builders say. More than 30 percent of single-family builders surveyed reported a shortage of framing lumber, the highest percentage since the NAHB began tracking such data since 1994.
Source: “Builders Say Lumber Prices Are Hurting Affordability,” National Association of Home Builders’ Eye on Housing blog (June 22, 2018) and “U.S. Builders Say Trump’s Tariffs Are Adding $9,000 to New Home Price, and That’s Not All,” The Morning Call (June 25, 2018)