Charley ups building-supply costs

8/17/2004

Demand for materials needed to re-build after the hurricane will likely exacerbate shortages and price increases, which have boosted the cost of an average new home $5,000 to $7,000 in the past year, according to industry executives.

This isn t going to help the pricing situation, said Carl Kale, manager of Carter Lumber in the suburb of Millbury. Between this hurricane and the fires out West, it s kind of like a double dip.

As Perrysburg housing contractor Doug Holdridge watched coverage of the devastation on Florida s gulf coast over the weekend, he knew demand there for plywood, framing lumber, and other products would likely affect prices he pays. It s going to go up, he said.

Wholesale prices of lumber for September delivery shot up yesterday by $10, or the maximum increase allowed in any one day, to $417 per thousand-board feet on the Chicago Mercantile Exchange, according to the National Association of Home Builders.

That is below the 2004 high of $472 reached during the first week of August but is still one-third higher than a year ago.

This was a devastating storm and there is going to be serious re-construction going on down there, observed Jerry Howard, chief executive of the association. That is going to call for a lot of building material. And it will probably have an impact on markets nationwide.

Point Place equipment-leasing executive Richard Vierling, who is building a $325,000, 2,500-square-foot house in Monclova Township, is glad he has purchased most building materials.

As it stands, he estimates that he spent $6,000 to $10,000 more for materials for the project begun in April than he would have if he had built a year ago. For some materials, the increase is close to three times as much, said Mr. Vierling.

You can wait and wait for prices to come down, he said. If you wait for everything to be perfect, you ll never build. You just have to bite the bullet and hold on from there.

Prices for plywood and certain plywood-substitutes used for flooring and exterior walls started to rise last year when the U.S. military began snapping up supplies at the start of the war in Iraq, said Nate Schoen, of UBuildIt, Toledo. Increases have since moderated, although prices for 2-by-4s and other framing lumber continue to escalate.

UBuiltIt, which assists people to act as their own general contractors on houses, has begun encouraging customers in some instances to use better-performing engineered products in place of traditional plywood products now that price differences have narrowed, Mr. Schoen said.

Nationally, the home builders group found higher prices and in some instances, shortages for framing lumber, particle board, cement, gypsum wall board, and insulation.

The association attributes increases and isolated shortages of cement on U.S. tariffs on imports from Mexico and shipping problems involving cement produced in Asia.

Overall, the increases have added $5,000 to $7,000 on a typical 2,250-square foot home, according to the organization s chief executive.

The wholesale cost of a 2-by-4 is $2.64, compared to $1.80 in February, said Mr. Kale, of Carter Lumber in Millbury.

There is some light at the end of the tunnel, however. The wholesale prices on commodity markets for delivery of lumber three months out was 11 percent cheaper than for delivery next month, suggesting that traders believe the hurricane effect could be short-lived.

Builders, however, are not looking for a quick return to the prices of two years ago.

When I quote a price, I tell people it could change in 10 days, said Tim Burns, of Structure Building Co., Perrysburg.

That s the nature of what we re in today. When you go into a lumber yard and ask for a price to supply a job, they tell you that it s good for today but it may not be the same tomorrow.

Contact Gary Pakulski at:gpakulski@theblade.com or 419-724-6082.