Real Estate News

Construction materials and the price of building new homes

Published: 08 Mar 2017

Many factors impact the ultimate rate of home sales, including the price it takes to build them. The National Association of Home Builders not only observed changes in sales but fluctuations in the price of framing lumber over the years. Though there have been ups and downs in this market, the overall trends for both the composite and CME futures prices have moved upward, according to the source.

As of March 3, 2017, the industry source listed the framing composite price as $366, nearly $20 more than the futures price.  For the latter, this represents a peak, while composite prices reached similar heights on June 12.

A clear concern is whether this will impact construction as a whole. Back in December, the NAHB and Wells Fargo collaborated on a survey regarding future challenges. The survey results found 60 percent of builders expect the price of materials to present a challenge in 2017.

However, this was 12 percent lower than the amount of survey subjects who saw cost and availability of labor as a difficulty instead. More respondents also dealt with labor issues in 2016 than those who said that material prices were an issue.

Other problems noted in the survey included the cost and availability of lots for construction, as well as regulations, fees and health insurance concerns. The share of builders with apparent problems concerning cost and labor for single-family homes has reportedly increased steadily since 2011.

Regardless, the future of the materials market may influence what does and doesn't get built. Building Design & Construction Magazine recently argued the industry has to pay more attention to the effects of climate change and the impact reusable materials could have on saving energy and reducing the overall waste left behind.