As areas affected by Hurricanes Harvey and Irma begin to rebuild, the demand for building supplies may translate into higher housing costs, both locally and nationwide.
David Hornung, general manager of Lengefeld Lumber Co. in Temple, said the business is already seeing sharp price increases and backlogged orders for supplies.
“Our basic roof decking has astronomically started going up (in price),” Hornung said. “Plywood and our yellow pine lumber have all seen pretty good price spikes. The availability of drywall has decreased. It’s taking two or three weeks to get a truck when it used to take two or three days.”
Hornung said Hurricane Harvey was so unprecedented that it’s difficult to project how far the effects will reach.
“It’s been a long time since we’ve had something like this,” he said. “Some of our people that we talk to feel like (prices) will level off in November when the mills over in East Texas can start catching up on their orders.”
Suppliers are also experiencing a shortage in available trucks as well.
“People are sending material to the coast, so the truckers that would be hauling lumber to us are hauling for FEMA, so there’s been a shortage of trucks. Our timeframe of getting material has extended,” Hornung said.
Higher home prices expected
He said the spikes in building material prices will likely result in higher home prices.
“It’s going to affect everybody. I know builders in our area are going to see price increases on homes they’re building,” Hornung said. “We’re all experiencing it. We’ve just got to work our way through it. Hopefully, in a couple of months things will calm down.”
Statewide, home sales activity throughout the first half of the year surpassed economic projections.
According to a report from the Texas Association of Realtors, home sales jumped 5.5 percent compared to the first six months of 2016. But Jim Gaines, chief economist with the Real Estate Center at Texas A&M University, believes Harvey recovery will likely deliver a negative impact to the state’s housing market for the remainder of the year.
“Houston’s housing market accounts for roughly 25 percent of the Texas housing market and it could take months before the Houston area begins to enter the recovery phase and a few years before the impacted communities fully recover,” Gaines said in a release.
Long-term impact uncertain
On a national scale, the Associated Press reported that builders were already experiencing a building supply shortage this summer, which was only exacerbated after the storms. As a result, U.S. homebuilders are feeling less optimistic about sales prospects as labor and material costs increase.
The National Association of Home Builders/Wells Fargo builder sentiment index released Monday slipped to 64 this month from 67 in August. Readings above 50 indicate more builders view sales conditions as good rather than poor. The index has been above 60 since September 2016.
Granger MacDonald, a Kerrville homebuilder and chairman of the National Association of Homebuilders, told the AP he thinks the dip in confidence is a temporary reaction to the storms.
“The recent hurricanes have intensified our members’ concerns about the availability of labor and the cost of building materials,” MacDonald said. “Once the rebuilding process is underway, I expect builder confidence will return to the high levels we saw this spring.”