Sam Spatter Pittsburgh Tribune Review
Just as new home construction started rising, a surge in lumber prices is boosting the cost of building as much as $5,000 or more here and nationwide.
The jump in prices is being driven by supply and demand, experts say. Last year, companies reduced production as demand fell, said Paul Jannke, a principal of Forest Economic Advisors LLC of Westford, Mass., which tracks lumber prices. As a result, inventories are low at dealers, and wet weather in the South has kept timber companies from harvesting product.
"The increase in demand for new housing caught everyone -- producers, suppliers and builders -- off guard," said Mitch Wagner, director of purchasing for 84 Lumber Co. in Eighty Four, Washington County. "Everyone expected a slight price increase because we anticipated an increase in new housing production, but not the amount of the increase" Relief may be a month or two away, he said.
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Plywood prices increased 42 percent since January, according to Wagner. Random Lengths of Eugene, Ore., which publishes lumber prices, reported the cost for 1,000 sheets of all sizes and thickness of OSB (oriented strand board), a plywood alternative, is $474 compared to $244 a year ago. And for 15 different sizes and thickness of 1,000 sheets of framing lumber, it is $367, compared to $210 a year ago.
Higher lumber prices are not the only factor determining the price of a new house. When oil prices increase, costs for delivery of materials such as carpet, asphalt shingles and other items to the home builder go up, builders say.
Heartland Homes Inc. of Lawrence, Washington County, the region's second-largest home builder, has increased its prices from $5,000 to $10,000 on a $400,000 home, said Kevin Oakley, director of marketing.
Greg Kinzler of Sparkle Construction Inc. of Westmoreland County expects homes he builds or renovates will have higher prices. "I paid $18 for a sheet of plywood in April, a sheet that previous was $9 or $10," said Kinzler, who serves as president of the Builders Association of Metropolitan Pittsburgh.
And other local builders are having to increase their prices as well. The situation is not occurring only locally, but nationwide.
The National Association of Home Builders said the gain in lumber prices has added about $2,400 to the price of a median home with 2,400 square feet of space.
"Lumber prices were so devaluated during the recession that the recent increase has not seriously hurt local carpenters or contractors," said Lou Gilberti, council representative for the Greater Pennsylvania Region Council of Carpenters in Collier.
"The problem about lumber is that in some instances the quality of the material being offered may not be as good as advertised," he said.
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