The National Association of Home Builders reports that building material shortages are currently at their worst since 1990 — meaning the supply chain is at its most strained point in 31 years — and that these shortages are leading to rising prices.
As of this past April, lumber prices had risen 86% year over year while the price of steel rose 67%, according to the U.S. Bureau of Labor Statistics. On the Thomasnet.com platform, our data shows that sourcing for building materials is up 115% year over year, and demand for lumber-related categories is currently up an average of 81% year over year.
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A newly published analysis from finance firm Freddie Mac says that the United States is 3.8 million homes short of meeting demand, a 52% change from 2018. This lack of housing supply coupled with growing demand in the wake of the pandemic is driving up housing prices, with the price of existing homes in the U.S. up almost 16% year over year, according to a report from the National Association of Realtors. Without building materials readily available to construct new homes in an effort to address this demand, experts expect home prices to continue to reach high levels.
That said, there is some promising data on the horizon. The Q2 2021 U.S. Chamber of Commerce Commercial Construction Index was up three points over last quarter with a score of 65, indicating that contractors’ confidence in the sector is improving. While 72% of contractors say they are still experiencing building material shortages and delays, this figure is down from 80% in Q1, a cautiously optimistic improvement.
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