Home Builders Report Significant Shortages in Key Building Materials

Builders and suppliers are notingrnsignificant shortages of certain home building materials even thoughrnnew home and other construction is described as far below normalrnlevels. The National Association of Home Builders (NAHB) and thernNational Lumber and Building Material Dealers Association (NLBMDA)rnreported the shortages based on recent surveys conducted by each. </p

Shortages of oriented strand boardrn(OSB) were reported by 22 percent of builders and 27 percent ofrndealers and wall board by 20 percent and 12 percent respectively. Plywood and framing lumber were also said to be in short supply byrnrespondents in the double digits in both surveys.

“Supplyrnconstraints are one of the barriers to a more robust recovery,”rnsaid NAHB Chief Economist David Crowe. “The shortages and pricernincreases reported by both home builders and lumber dealers arernparticularly concerning given that the current rate of constructionrnis still far below what would be considered normal or necessary tornmeet underlying demand.”

More builders reported arnscarcity of wall board than did dealers but for each of the 23 otherrnbuilding products about which each group were questioned morernsuppliers reported shortages than builders. The share of buildersrnreporting a shortage of most products was higher than in similarrnsurveys conducted by NAHB in May of 2011 and 2012. The onlyrnexceptions were copper wire, vinyl siding, HVAC equipment,rninsulation, and structural insulated panels.. </p

“The shares of reported shortagesrnare not as high now as they were in 2004 or 2005, but the increasesrnsince 2012 are quite significant, especially when you take the earlyrnstage of the housing recovery into account,” said Crowe. “Inrn2004 and 2005 the home building industry was producing over 1.8rnmillion new homes a year, while the current rate of new housingrnstarts is still below 1 million.”

A larger percentage ofrnlumber dealers reported price increases in building materials overrnthe last six months than builders. Dealers reported an averagernincrease in the cost of materials they sell of 10 percent or morernwhile builders reported a 5.17 percent increase. Most builders thanrnsuppliers reported increases in the cost of concrete relatedrnproducts.

“While a nascent housing recovery is underway,rnas reflected by the modest increase in sales by dealers, it’s clearrnthat the ongoing material shortages and price increases beingrnreported by dealers continue to be a cause for concern as we moverninto the latter half of 2013,” said Michael O’Brien, NLBMDArnpresident and CEO.</p

NAHB’s survey was in the form ofrnspecial questions added to its monthly survey for its Housing MarketrnIndex. The dealer results come from a special survey of NLBMDA’srnmembers, who operate single or multiple lumber yards and componentrnplants and deal in many of the same products that NAHB membersrnpurchase.

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