Building Industry Battles Soaring Lumber Costs And Labor Woes

Mortgage News June 8, 2023

According to the Q1 2023 United States Country Insight and Commodity Report by Linesight, the economy experienced a modest growth of 1.6% in 2023. However, the construction industry saw a decline of 0.9%, which can be attributed to a sluggish residential sector, persistent labor shortages, and higher interest rates.

The report also highlighted that there has been some improvement in the supply chain situation, but several suppliers of Long Lead Equipment (LLE) mentioned operating at full capacity, with their order books filled until Q3 2024.

Labor remains a significant concern across all industries, especially due to the decreased availability of skilled workers, which is further exacerbated by the growing number and scale of specific projects.

Furthermore, the report revealed a continuous decline in lumber prices, with an average quarterly decrease of 14.5% in Q1 2023 compared to Q4 2022.

In the first quarter of the year, steel prices experienced a minor increase. Nevertheless, the report suggests that the impact of improved supply and the weakened residential sector will be counterbalanced by higher investments in infrastructure and industrial construction projects. As a result, it is expected that flat steel prices will remain high during Q2 2023.

The January 2023 National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index highlighted that builders have been primarily concerned with the price and availability of building materials over the past year. However, interest rates, general inflation, and negative media coverage have gained considerable prominence on the list of challenges. Based on responses from the January 2023 survey for the NAHB/Wells Fargo Housing Market Index (HMI), building material prices were identified as the most significant issue for builders in 2022, cited by 96% of builders. Availability and timing of obtaining building materials followed closely, cited by 86% of builders. These two concerns were also at the top of the list in 2021.

Trading Economics projects that lumber prices will reach $362.46 per 1000-board feet by the conclusion of Q1 2023.

Similarly, the expense and accessibility of labor have been consistently recognized as significant challenges, with 82% of builders reporting it as a problem in 2021, and the figure rising to 85% in 2022.

<!-- /* Font Definitions */ @font-face {font-family:"Cambria Math"; panose-1:2 4 5 3 5 4 6 3 2 4; mso-font-charset:0; mso-generic-font-family:roman; mso-font-pitch:variable; mso-font-signature:3 0 0 0 1 0;} @font-face {font-family:Calibri; panose-1:2 15 5 2 2 2 4 3 2 4; mso-font-charset:0; mso-generic-font-family:swiss; mso-font-pitch:variable; mso-font-signature:-469750017 -1040178053 9 0 511 0;} /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-unhide:no; mso-style-qformat:yes; mso-style-parent:""; margin-top:0in; margin-right:0in; margin-bottom:8.0pt; margin-left:0in; line-height:107%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri",sans-serif; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:Calibri; mso-fareast-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi; mso-font-kerning:1.0pt; mso-ligatures:standardcontextual;} .MsoChpDefault {mso-style-type:export-only; mso-default-props:yes; font-family:"Calibri",sans-serif; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:Calibri; mso-fareast-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} .MsoPapDefault {mso-style-type:export-only; margin-bottom:8.0pt; line-height:107%;} @page WordSection1 {size:8.5in 11.0in; margin:1.0in 1.0in 1.0in 1.0in; mso-header-margin:.5in; mso-footer-margin:.5in; mso-paper-source:0;} div.WordSection1 {page:WordSection1;} -->

Need a list of title insurance agents in your area? Contact Jennifer Swanson at 260-223-9203 or Jennifer@SpecialtyContactDatabases.com


Contact Us/Order Samples

For any questions OR a sample of the records please submit the following form.

Submit your comments, questions, or requests below. If you include your phone number, we will call you back.

Source:

I am Interested In: