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Elite
Named to Business First's Fast 50 • Lumber
Prices Go Up • Development
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and Home TipsEmployee
Profile
by John Hagan
 Thanks
to weather, war and a record home-building boom, lumber
prices have in some cases doubled compared to a few months
ago. These higher prices are having an effect on what it
costs to build a new home.
The prices of the structural panels, including plywood and Oriented Strand
Board or OSB, are up significantly more than the dimensional lumber -- the
2x4s and 2x6s. For example, 5/8” plywood, which is used on our roofs,
has recently gone from around $14 to over $25 per 4x8 sheet. 3/4” plywood,
which is used for the subflooring in our homes, has gone from around $18 to
over $30 per sheet.
The laws of supply
and demand are the underlying reason for the drastic increases.
Drought on the West Coast, rain and hurricanes on the East
Coast and a forest fire in British Columbia are the major
reasons the lumber supply is not meeting the demand. Meanwhile,
historically low interest rates kept the construction scene
around the country robust. According to the National Association
of Home Builders, sales of new homes were up 3.4 percent
for the month of August. That’s the second-fastest
growth in a month on record. According to lumber suppliers,
the government's recent large purchase of plywood also
contributed to the shortage. The U. S. Department of Defense
bought about $50 million worth of wood, including 666,000
sheets of plywood, much of it to build bunkers, guard posts
and tent flooring for troops in Iraq.
We fully expect
the lumber prices to settle back down in the future. We
are going to raise the base prices of our Patriotic Series
homes on December 1st, but the increase will take into
account only about half of the lumber increase we are currently
experiencing with the anticipation of the price retreating
next year. Combined with materials and labor cost increases
on other building products in the past year, our home prices
will rise approximately 3%. |
