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Breaking Flooring News

Builders and Lumber Dealers See Shortages of Key Building Materials

NAHB
June 24, 2013

Home builders and lumber dealers are reporting significant shortages of key home building materials such as lumber and wall board, according to recent surveys by the National Association of Home Builders (NAHB) and the National Lumber and Building Material Dealers Association (NLBMDA).

"Supply constraints are one of the barriers to a more robust recovery," said NAHB Chief Economist David Crowe. "The shortages and price increases reported by both home builders and lumber dealers are particularly concerning given that the current rate of construction is still far below what would be considered normal or necessary to meet underlying demand."

Among builders, the highest incidence of shortages was for oriented strand board (OSB), with 22 percent of builders reporting shortages, followed by wall board (20 percent), framing lumber (18 percent) and plywood (18 percent). The builder results come from special questions added to the monthly survey that serves as the basis for the NAHB/Wells Fargo Housing Market Index (HMI), which is widely viewed as a key indicator of the overall strength of the home building market.

With the exception of wall board, the lumber dealers reported greater shortages of these products than the home builders. Among lumber dealers, 27 to 28 percent reported shortages of OSB and plywood, 36 percent reported shortages of framing lumber and 12 percent reported shortages of wall board. The dealer results come from a special survey of NLBMDA's members, who operate single or multiple lumber yards and component plants and deal in many of the same products that NAHB members purchase.

Both the builder and lumber dealer surveys asked about shortages of 24 specific building products and materials. For most of the products, the share of builders reporting a shortage was considerably higher in May of 2013 than in 2011 or 2012. The only exceptions were copper wire, vinyl siding, HVAC equipment, insulation and structural insulated panels.

"The shares of reported shortages are not as high now as they were in 2004 or 2005, but the increases since 2012 are quite significant, especially when you take the early stage of the housing recovery into account," said Crowe. "In 2004 and 2005 the home building industry was producing over 1.8 million new homes a year, while the current rate of new housing starts is still below 1 million."

With the exception of concrete-related products, a larger share of lumber dealers than builders reported price increases in building materials over the past six months. On average, builders reported a 5.17 percent increase in the materials that go into a house over the past six months. Most lumber dealers reported that the prices of the products they handle had increased on average by 10 percent or more over the past six months.

"While a nascent housing recovery is underway, as reflected by the modest increase in sales by dealers, it's clear that the ongoing material shortages and price increases being reported by dealers continue to be a cause for concern as we move into the latter half of 2013," said Michael O'Brien, NLBMDA president and CEO.

The reported results reflect survey data collected from NAHB builders and NLBMDA dealers during the first half of May; 383 builders and 230 dealers provided responses. For more information or a copy of the complete report covering both surveys, contact Paul Emrath at 800-368-5242 x8449.

KEYWORDS: building materials Lumber National Association of Home Builders (NAHB)

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