It’s not just lumber that’s pushing up the price of new homes. It’s many materials used for building, including seldom talked-about products made with gypsum—a key component in the wallboard, cement, and certain types of plaster it can take to build a sturdy house.
Building materials prices increased 20.3% in January from the same month last year and now have risen 28.7% since January 2020, the National Association of Home Builders said, pointing to the latest Producer Price Index (PPI) report released by the U.S. Bureau of Labor Statistics. The overall increase was boosted by a 25.4% jump in softwood lumber prices in January, but other prices—like for indoor and outdoor paint—went up, too. Prices of gypsum products added 3.4% in January—the 11th consecutive monthly gain—as shown in this chart.
As is the case with many things these days, the reasons for the increasing prices include shortages, supply chain disruptions, and high demand—a troublesome combination that’s helped push the cost of building a new home much higher.
The national median home price increased to a record $360,000 in the fourth quarter of last year, partly due to rising construction costs. That was up $5,000 from the third quarter of 2021 and $40,000 from the first quarter, according to the NAHB/Wells Fargo Housing Opportunity Index.
“Supply-chain disruptions stemming from labor shortages to lumber to home appliances and other building materials are delaying construction times and contributing to higher home prices,” NAHB Chairman Chuck Fowke said in a release earlier this month.
Many building materials producers, including sawmills, had either closed or slowed production during the worst of the COVID-19 infections in 2020, leaving supply to dwindle during a time of surging demand. The NAHB estimated that the share of builders reporting a shortage of gypsum wallboard last May had increased to 70% from 8% in June 2020.
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