Material prices threaten housing affordability
Washington, DC – It’s not just wood. According to the National Association of Home Builders (NAHB), rapidly rising prices for other building materials that rely heavily on the housing construction industry are causing widespread concerns.
While skyrocketing timber prices (up more than 300% from April 2020) have dominated headlines over the past year, prices for other materials such as steel, concrete and plaster products all continue to rise at a record pace, the NAHB said.
“The price volatility of steel mill products is greater than ever since the Great Recession,” said David Logan, senior economist, NAHB. “Prices have increased by 22% in the past three months. Perhaps more troubling than rising prices is that the pace of price changes has accelerated over the past nine months. “
Logan added that prices for plaster products have risen 12.5% in the past year, including a notable increase in the past two months. He also mentioned the “unusual volatility” of ready-mixed concrete prices, which have risen in every region of the country.
Ultimately, price increases and supply constraints will cause potential buyers to be increasingly priced out of the market. In addition, the issue disproportionately harms large middle- and low-income households, the NAHB said.
“[Rising materials prices] significantly increase prices for single-family houses and apartments, ”said Robert Dietz, NAHB’s chief economist. “Coupled with expectations of rising interest rates, these higher prices are putting additional pressure on housing affordability, which declined further in the first quarter.”
The NAHB said it would continue to argue for solutions and urged the Biden administration, Congress and other lawmakers to take action. According to the NAHB, the subject was recently discussed at length during hearings in Chamber and Senate that were held earlier this week.