Home construction costs have nearly doubled since last year, according to Crow’s Weekly Market Report.
The total cost of lumber and panels for construction of a 2,116-square-foot home is nearly double that of year-ago levels. Based on the Crow’s Construction Materials Cost Index (CMCI), the wholesale cost of lumber and panels for framing an average home has risen to just above $7,000 from $3,830 in April 2009.
Crow’s noted that when these figures are applied to the March 2010 single family housing starts number of 531,000, the potential exists for an additional cost to the home building industry of $1.7 billion. This rise can be attributed to the continuation of a uniquely supply-driven lumber and panel market.
Crow’s reported that while sustained and unexpected price increases for lumber and panels have been seen in the recent past — specifically in the 2004-2005 timeframe — those increases were almost solely driven by demand from new housing starts. In today’s markets, retailers, wholesalers and producers alike have learned to get by with as little inventory as possible, in an effort to keep ahead of an expected drop in demand and prices as North America continues to fight its way through the mortgage crisis and debilitating economic times.
