As lumber futures drop, experts say it will take more time to see that reflected in prices
COLUMBIA, S.C. (WIS) - Recent supply chain disruptions and shortages have challenged people trying to build new homes, while a hot sellers’ market has limited the inventory of available homes.
While the inventory of homes on the market is better right now than it was a few months ago, according to the Central Carolina Realtors’ Association, it is still about 40% to 50% lower than where it was at this point last year.
“Right now, what we’re seeing is incredible demand, and there’s actually a housing shortage,” said Allen Hutto, the CEO of the Building Industry Association of Central South Carolina.
But for one of the key materials in short supply, lumber, futures have dropped nearly 30% for 2021.
“Lumber futures have come down on things like two-by-fours, like framing lumber,” Hutto said.
But, he added, it will take a while to see that fully reflected in the cost, especially as suppliers said other lumber prices, like those for plywood, have remained the same.
Builders are also still facing other material shortages that could keep the build process backed up, including windows and garage doors, Hutto said.
“The cost of framing lumber only makes up, generally, about 15 to 20% of the cost of a house,” he said. “So there are other factors as well which have driven the increase in housing.”
Taylor Oxendine, the co-executive officer of the Central Carolina Realtors’ Association, said some of those factors include more millennials buying homes as well as more people and investors from out of state doing the same.
“We’re hoping that things, as the lumber prices come down, as more people are vaccinated and feel comfortable leaving their home, that that’ll put more on the market to alleviate some of this pressure,” Oxendine said.
Oxendine and Hutto caution that a major shift in prices and inventory won’t happen overnight.
“A lot of home buyers bought up a lot of the lumber when prices were going up, so until they get rid of that supply that they have, it may take a few years before we start seeing things kind of return to normal,” Oxendine said, adding that he expects it to stay a sellers’ market for the foreseeable future.
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