Home builders are struggling to obtain basic materials like lumber and steel, slowing down projects and driving up costs, just one example of the supply chain problems disrupting the U.S. economy and propelling inflation to levels not seen in 40 years.

What You Need To Know

  • Supply chain issues are disrupting the home renovation industry; Home builders are struggling to obtain basic materials like lumber and steel, slowing down projects and driving up costs

  • While home prices in the U.S. surged more than 18% in October 2021 from a year prior, and those trends are expected to continue in 2022, widespread supply chain issues and bottlenecks at ports have led to significant delays in home renovation projects

  • Prices of building materials have actually begun to fall: According to the Producer Price Index (PPI) from the Bureau of Labor Statistics released in August, building material prices increased 19.4% in the last 12 months; But in December's PPI, released earlier this month, that figure has fallen sharply, though still higher than pre-pandemic figures

  • A bipartisan group of lawmakers sent a letter last month urging President Joe Biden to appoint a supply chain czar to address problems like these, though he did appoint John Porcari to serve as Port Envoy to the White House Supply Chain Disruptions Task Force

While home prices in the U.S. surged more than 18% in October 2021 from a year prior, and those trends are expected to continue in 2022, widespread supply chain issues and bottlenecks at ports have led to significant delays in home renovation projects – everything from furniture and appliances to windows and doors, and even raw materials like lumber.

Keith James, a managing partner with Coalition Properties Group, told Spectrum News that the delays are wreaking havoc on his business: "I have about six more weeks on the windows, we ordered the windows about two months ago and they haven’t arrived yet."

In an interview with Spectrum News, James walked through a home renovation project in Washington D.C., that is almost four months behind schedule, still missing granite countertops, windows and cabinet handles, among other amenities.

What's more, it’s not just the availability of materials, but also the ability to deliver them.

“The shipping problems we are having from China, Germany and overseas has been a huge hassle and has caused a lot of delays," James said. "Even to the point of the routes of shipping the products."

James’ contractor, John Paul Joy, said he’s never seen delays like this before: “It’s very frustrating in terms of ordering materials and having everything to work."

"We also are waiting for windows, doors, things like that we are pushed back multiple weeks," Joy said. "For us, we can’t preorder them because they are all specific sizes for projects we are working on."

The shortages and delays are also helping to drive up prices, said James: "Where we would pay $2.60 for 2-in x 4in dimensional lumber, it’s now costing $6.84."

That said, prices of building materials have actually begun to fall: According to the Producer Price Index (PPI) from the Bureau of Labor Statistics released in August, building material prices increased 19.4% in the last 12 months. But in December's PPI, released earlier this month, that figure has fallen sharply, though still higher than pre-pandemic figures.

While those figures are falling, James’ construction project is $26,000 over budget.

"I tell my clients the properties that were 300,000 dollars last year are going to be 350,000 this year and 400,000 next year," he said.

Adding to the problems facing home builders, the U.S. more than doubled tariffs on Canadian lumber in November. The Biden Administration said Canada is unfairly subsidizing its lumber industry, making it hard for U.S. lumber companies to compete. The move was welcomed by U.S. lumber producers, but decried by economists and the Canadian government.

“Right now there’s no trade agreement with Canada," said Jerry Howard, the president of the National Association of Home Builders. "It’s in a dead zone. The prices are unpredictable, the supply is unpredictable."

A bipartisan group of lawmakers sent a letter last month urging President Joe Biden to appoint a supply chain czar to address problems like these, though he did appoint John Porcari to serve as Port Envoy to the White House Supply Chain Disruptions Task Force.

In an interview with Spectrum News last month, Porcari said that goods are moving faster at the ports of Los Angeles and Long Beach in California, which handle 40% of the country’s imports.

"Those two ports are much more fluid. The goods are moving faster," Porcari said. "As Americans, we have gotten used to our goods movement chain functioning without having to think about it twice. During the pandemic, we found out we don't have that luxury."

 

Still, the National Association of Home Builders supports the idea of a supply chain czar.

“It should be short term, examine the problem, recommend solutions, implement solutions,” Howard said.

Until then, developers like James say they continue to lose money every day. Prior to the pandemic, he said, this home renovation project could have been completed in a month. Now, it isn’t expected to be finished until mid-February.

“My first mortgage payment was due in October, so I’ve been paying a mortgage on this property since October and it’s not even done yet,” James said.

James said it’s critical to set proper expectations when working with clients, urging patience amid the supply chain issues.

“If we meet with a builder and a builder says 'oh you can be in this house in six months', we tell our client, I know they are saying six months, but typically right now it’s going to run you 8-12 months to get into your home,” James said.