Lumber Prices Are Lower, but Here’s Why Your Home Projects Could Still Cost More
For those planning a home improvement project: Hold on to your wallet! While the price of lumber has dropped in recent months, you may be surprised just how much more you’ll pay for some building materials.
The skyrocketing price of lumber has dominated headlines in the residential construction world over the past couple of years. However, the latest Producer Price Index (PPI) report shows that the price of softwood lumber fell 23 percent in June. And while that may be good news for anyone planning to build a new home or tackle a big home improvement project, prices for other popular building materials are going up. In fact, prices of building materials have surged nearly 42 percent since January 2020 and are more than 12 percent higher than they were just a year ago, in June 2021.
So, how much can you expect to pay for your next home project? Here’s a breakdown of what might eat into your budget.
The price of softwood lumber is down nearly 23 percent in the latest Producer Price Index, including a 35 percent price drop since March 2022. This is welcome news for those looking to build or add on to their existing home. The bad news is that the National Association of Home Builders says it’s still unclear if the decrease in price has really reached home builders and remodelers.
Since April 2020, the National Association of Home Builders reports softwood lumber prices spiked enough to add $14,345 to the price of an average new single-family home and $5,511 to the market value of an average new multifamily home.
If you’re planning a project that includes ready-mix concrete, such as foundation work, setting fence posts, or repairing a driveway, get ready to pay more for the necessary materials.
You’ll pay at least 11 percent more for ready-mix concrete than you did just a year ago, and where you live will likely determine how much you’ll pay. Those living in the Western United States have seen a 23.2 percent price hike since January 2020, while those in the Midwest have seen the smallest increase, at 10.6 percent.
Do you have a drywall project waiting in the wings? The good news is that the increase in the price of gypsum products has slowed, rising just 0.1 percent in June after surging 7.1 percent in May. The bad news is that the price of gypsum products climbed 23 percent in 2021 alone, and it may increase even more.
Ken Simonson, chief economist for the Associated General Contractors of America, said in a statement to the Engineering News-Record that while lumber may have recently decreased in price, some materials—like gypsum—appear headed for further increases as a result of the fragility of the supply chain and difficulties filling job openings.
When it comes to home construction, steel has certain advantages over traditional wood. Steel is long-lasting, versatile, and resistant to natural disasters when used in residential construction, and it’s also generally cost efficient. However, the cost of this durable building product is rising. While steel prices have dropped in recent months and are 6.5 percent below their all-time high in December 2021, they are still at twice their January 2021 level.
Even simple home improvement projects will cost you more these days. For instance, you’re going to pay quite a bit more to paint that room or the exterior of your home than you did just a year ago.
Although the price of paint was flat over the last month in the June PPI, the prices of both interior and exterior paint have jumped 33.2 percent and 49.3 percent, respectively, since January 2021.
American Painting Contractor, a magazine devoted to helping paint professionals, notes that shipping issues and supply chain problems are contributing to the cost increases.
The rising cost of transporting goods is one factor that’s adding to the price of building materials. Since May 2020, the indices for both local and long-distance motor carrying prices are up 31 percent and 46.5 percent, respectively. The cost of water transport is down 1.5 percent over the last month, but it jumped more than 21 percent in the 2 months prior to June 2021. Deep sea transportation has climbed 57.8 percent since spring 2020.
The National Law Review cites three major reasons for the increase in freight costs: the Covid-19 pandemic, shipping and supply chain issues, and the Russian invasion of Ukraine. The journal reports that it’s unclear when freight costs will drop.