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Material Prices Up
David Crowe, NAHB / BUILDER / July 15, 2013
A typical home’s total materials costs increased 5 percent during the past six months; higher in the South and West.
Home building material prices soared earlier this year although some calm arrived recently. Material costs account for about one-third of a new home’s selling price, so a 10 percent rise in material costs equates to an average $8,500 price increase per house. The current conservative appraisal environment makes that kind of increase near impossible. Two recent NAHB surveys highlight the extent of these trends and the materials most affected.
The NAHB surveyed builders and building material sellers, in cooperation with the National Lumber and Building Material Dealers Association, on what commodities they bought and the degree of price movement they experienced during the past six months.
Builders said they most often purchased framing lumber, windows, doors, millwork, gypsum, and roofing materials. They cited that the materials experiencing recent price increases include (in the order of largest percentage): framing lumber, OSB, plywood, gypsum, trusses, ready-mix concrete, roofing materials, and cement. There were no major differences across the four census regions or three sizes (by number of starts) of builders.
Surveyed dealers’ most frequent purchases were OSB, framing lumber, plywood, windows, doors, millwork, gypsum, and insulation. Dealers listed the same top five materials, but a larger share saw increased pricing. They also were more likely than builders to receive higher prices for insulation, SIPs, windows, and doors. Differences in gross sales levels did not appear to affect the dealers’ experiences.
The five materials most cited by builders for price increases also showed the greatest change in builders experiencing an increase. In mid 2012, 58 percent of builders saw framing lumber increase but by mid 2013, the share rose to 92 percent. The share of builders seeing price increases in OSB and plywood rose by one-third and the share seeing truss price increases rose from 51 percent to 80 percent.