Despite reports of lumber prices declining across the country, Dallas Builders Association executive officer Phil Crone said costs remain a concern in north Texas.
“We aren't seeing a marked decline in Dallas,” Crone told Texas Realty News. “Overall, things are as challenging as they have ever been in terms of access to materials and pricing. On lumber, there are a few very important things to take note of. Many people cite the random lengths lumber chart, which only covers framing lumber like 2 by 4s and 2 by 6s and impart that onto the entirety of lumber that goes into the project, such as trim and OSB (oriented strand board, a popular, versatile structural wood panel), which are not measured by that index.”
Most builders in the area are still paying at least 2 1/2 times more for lumber than they did early last year, he said.
“That is an improvement from it nearly tripling over the summer, but we are still at an extremely elevated rate,” Crone said. “Making matters worse are the litany of other products that have become significantly more expensive over the last year and even in the last three months.”
The COVID-19 pandemic caused a downturn in lumber production for many reasons, including workplace restrictions in mills, the need for more deep cleaning, and an expectation that demand would drop. Instead, as people sought to purchase, expand or remodel homes, the building industry was inundated with work.
That led to a high demand for lumber and a short supply, which led to unprecedented price spikes.
The National Association of Home Builders has provided data to track these increases, Crone said.
“Although the recent drop in softwood lumber prices since mid-May is helping bring costs down, the decline has been offset by large increases in the prices of several other building material products,” the NACB reports.
“The price of lumber on the futures market has given up all of its gains for this year, falling by more than 50% in just the last few months,” according to a CNBC report. “Homebuilders, homebuyers and homeowners looking to remodel, however, are not seeing savings yet. Lumber prices hit a record high May 7, at $1,670.50 per thousand board feet on a closing basis. That was more than six times their coronavirus pandemic low in April of last year.”
As prices continued to rise, home construction and upgrades slowed. Sawmills report an issue with hiring enough workers. And with pandemic restrictions loosened, many people are spending their money on travel and vacations.
Crone said the challenge for the home construction industry goes beyond lumber to something he has not seen during his career.
“It seems as if we are playing an expensive game of whack-a-mole trying to find reliable supply chains and price certainty on products across the board,” he said. “These things would happen in the past to one, maybe two, products. Now literally everything is a challenge not just for home building but also lot and land development.”
Crone also sees future instability. While the pandemic, which sparked the increase in lumber prices as well as other shortages, is lessening, the problem with access to materials won’t vanish. Crone understands the impact of COVID-19, since he came down with it in 2020. He recovered, but the building industry is still far from healthy.
“Going forward I see volatility continuing well into next year and that includes lumber. I don't think it will go back to where it was in May, but it will fluctuate,” he said. “Products with supply chains that start overseas will be the least predictable because the pandemic response, and recovery differs significantly throughout the globe.”
Crone, however, said the Dallas-Fort Worth area remains a vibrant place for the industry. People want to live there, and that means the demand for houses won’t lessen anytime soon.
The Dallas Builders Association was formed in 1944. It has about 1,300 members, almost exclusively involved in residential home construction, with about 400 builders and remodelers, plus suppliers, subcontractors and service providers who assist them.
“Despite all of these challenges, DFW could set a new record for single family construction permitting this year,” Crone said. “Our state and region remain more desirable and affordable than coastal markets. I'm confident we will weather the storm here better than anywhere else.”
