The Honest Broker: New Construction and Skyrocketing Prices
BY: Diane Lott, Broker Paradise Found Realty, Inc
Building a home during these past few months has proven to be very alarming to
the builders, and consequently, the buyer’s bottom line. The biggest contributor
to these increases correlates with supply issues and the inflationary rise of
products. According to the Bureau of Labor Statistics Producer Price Index (PPI),
which was recently released, the prices of goods used as inputs to residential
construction including and excluding energy have risen 19.0% and 12.0%,
respectively, year-to-date (YTD).
Although the recent decline in lumber prices is helping bring costs down (after a drastic rise earlier in the year), the decline has been offset by large increases in the prices of a multitude of other products. Of goods inputs to residential construction, including lawn care products, the prices of these 10 have increased the most thus far in 2021:
• Steel mill products
• Building paper and building board mill products
• Asphalt
• Plastic water pipe
• Fertilizer materials
• Laminated veneer lumber
• Thermoplastic resins and plastics materials
• Structural metal joists and concrete reinforcing bars
• Wood window and door frames
• Copper pipe and tube
Over the first seven months of 2021, the majority of these products’ prices have
increased many times more than they did in 2020. The price change of steel mill
products is the most glaring example, increasing 81.3% YTD following a 2020
increase of 11.1%
As the supply chain experiences delays and inflation continues, it is projected that skyrocketing prices are expected to continue into fall of 2022 and continue to impact new home building for quite some time.
Be Well!!
Diane
Diane Lott, Broker
Owner: Paradise Found Realty
Paradise Found Realty, Inc. of Palm City
website: www.ParadiseFoundRealtyFl.com
Email: diane@paradisefoundrealtyfl.com
Phone: 954-294-5060
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