Lumber prices, labor shortages taking toll on homebuilders
Posted by Carlos Renteria on
By: Katie Garwood
Despite strong demand for housing, Northeast Florida homebuilders are becoming increasingly cautious when putting speculative homes on the market as lumber prices continue to rise.
MasterCraft Builder Group founder and CEO Chris Shee said he first noticed an increase in 4-by-8-foot oriented strand board, an engineered wood panel, in September. In August, he paid just more than $10 a sheet. Now, it is around $55, he said.
The National Association of Home Builders estimates prices have increased 200% since April 2020, causing the average price of a new, single-family home to increase by $24,000.
“We should all be doing backflips because the market is finally super strong as far as how many people want to purchase homes,” Shee said.
“Builders are all scared to contract a home right now because we don’t know what the cost is going to look like.”
Shee said typically when he sells a home before it is completed he knows how much it will cost and how much he can sell it for. Lumber usually is bought three months after the house is put under contract.
Since lumber prices are constantly fluctuating, Shee isn’t putting homes on the market until they have cabinets and countertops installed because at that point he will know how much they cost.
“We will build homes this year at breakeven or at a loss in some cases,” Shee said.
The price increase is a simple supply and demand issue, he said. Many lumber factories closed during the pandemic and have struggled to keep up with high demand for building products and housing.
MasterCraft is working on homes in several St. Johns County communities, including Silverleaf, Shearwater, Rivertown, Trailmark and Madeira.
Shee said between late February and mid-April, his company’s home prices have increased about $18,000, on average.
“We are very much hoping that lumber prices stabilize soon as we try to keep prices as affordable and attainable as possible,” O’Neal said.
“We take great pride in keeping our average home sale price under $200,000.”
Shee said in addition to lumber prices, finding employees also has been a challenge.
While MasterCraft is well-staffed, Shee said the contractors they work with are struggling with labor, which is slowing the building process.
“Why would you build 20 houses when you can only build six per month or 10 per month,” he said.
“You’re just making yourself more vulnerable. So that’s why builders are just selling at a pace they know they can build, and we’re mitigating our risk by limiting the number of sales per month.”
In his 20 years in the business, Shee said he can remember when building materials were scarce, but the labor shortage is a newer challenge.
Shee said he expects lumber prices to begin to stabilize this year, and hopes costs don’t rise in the meantime.
“Our jaws were dropping and dragging when (oriented strand board) was about to go to 40 bucks and now we’re looking at 60 bucks for one sheet of plywood,” he said.
“It would take a kid working all summer to build a skateboard ramp right now, it’s just so expensive.”