The procurement director for a Fredericksburg-area building supply company has given up worrying about lumber prices.
Thomas Kujawa said that his concern now is actually getting shipments of 2-by-4s, floor joists and other wood products, which have more than tripled in price, from sawmills to Jim Carpenter Co. in Spotsylvania County so he can supply his customers.
“There have been acute shortages for two years,” he said. “Last year, the hot ticket item was pressure-treated wood. This year, everything from floor joists to panels to lumber have been in short supply. When you can’t find it, the prices become secondary.”
Kujawa attributed the challenges he and other suppliers and builders are facing to a combination of factors, including the decision by sawmills across the United States and Canada to shut down when the pandemic hit last year. They were concerned that orders would dry up like they did during the last recession and let many of their workers go.
While the mills did begin reopening about two months later, they’re now “behind the eight ball” at a time when there is a record-setting demand for new houses, Kujawa said. Stafford County alone has seen permits for construction of new homes climb 14 percent from the last fiscal year.
To make matters worse, power outages caused by the winter storm that hit Texas in mid-February temporarily shut down petrochemical plants. Now they’re dealing with a backlog of orders for the resins that one local builder described as the “secret sauce” that goes into everything from siding to the insulation inside appliances.
There’s also a shortage of truck drivers to get the needed supplies from mills and manufacturers to market, Kujawa said.
“I used to have a full head of hair and it used to be blond. I’ve been pulling it out and having a lot of sleepless nights,” he said. “Fortunately for me, I have a couple different locations that I deal with, so I can shift back and forth to deal with inventory challenges.”
Lack of supply coupled with a surge in demand sent the price of framing lumber on a roller-coaster ride this year. The price peaked at an all-time high of $1,670.50 per thousand board feet in early May, almost four times higher than in May 2020. But prices plummeted in June, ending the month at $716.
The increases were reflected in the price of a new house. The median was $372,400 for a new, single-family home house in April, according to the latest U.S. Census Bureau figures. In April 2020, it was $310,000.
“That’s a $62,000 increase, but you can’t attribute all of that to lumber,” said Shawn Church, editor of Fastmarkets Random Lengths, a trade publication that tracks lumber prices. “It’s about half of that increased cost.”
Builders are also having trouble getting everything from drywall to garage doors and windows. Prices for those have increased as well, said Craig Toalson, CEO of the Home Builders Association of Virginia.
“A lot of times you’ll drive by houses that are being built, and windows are the last thing going in,” he said. “Lead time is way out. Usually builders would allow four to five weeks for windows. Now it’s almost six months. They used to build a home in 90 to 100 days. Now six months is kind of the minimum.”
He said builders are struggling to keep up with changing costs as they figure out how to price their projects. Some have told him they have to raise prices every week while others have confided that they’re losing money.
“It’s wild times,” Toalson said. “Builders are doing their best to set customer’s expectations, but it’s tough.”
Toalson said he hopes supply chains will catch up to demand by fall or early next year. The drop in lumber prices is one possible portent of this.
Dan Sandoval, president and CEO of Republic Homes in Spotsylvania, said one way his company has been dealing with the issue is to include an escalation clause in contracts for the more than 30 custom homes it expects to build this year.
“Prior to the pandemic, we did not,” he said. “I do not know of any contractor that did.”
Republic Homes is also placing orders for such things as appliances, windows and garage doors as soon as they have the permits to build a house. Sheetrock prices have gone up and it is getting a little scarce as well, Sandoval said.
“We’re also running into labor issues. Subcontractors can’t seem to hire anyone. It’s a tough job. It’s mid-80s and humid and you’re working outside,” he added. “It’s hot sweating and dangerous and it’s tough to fill those jobs. You can start out working at a big box store and make $15 [an hour] or work with a framing contractor and make $15.”
Sandoval, who serves on the Fredericksburg Area Builders Association board, said that organization’s FAB Foundation offers grants for people interested in learning a trade as a way to help build the local workforce. The foundation can also provide mentorship by members and job placement opportunities.
“The biggest need is with carpenters,” he said. “That is where we’re having challenges.”
Another FABA member, Atlantic Builders, is dealing with rising costs and supply shortages by being creative in leveraging its relationship with suppliers for the 270 houses it expects to complete this year, said Brian Roinestad, the Fredericksburg-based company’s director of purchasing.
The company has remained loyal to its window supplier, for example, and is trying to understand its problems and adjust to make things easier. That includes ordering windows at the same time permits are filed so the supplier has a longer production time, he said.
“Honestly, the bigger concern now is more supply than it is cost. Cost is certainly important, but if you can’t supply materials for the home, then our homeowners won’t have a home to move into. Supply is step one,” said Roinestad.
“You can continue building a home without siding. You can get inspections. The final trades can do what they need to do, but something like not having windows puts you at a dead stop. You should have windows before you put up drywall,” he added.
Orders for other products such as roofing materials, siding and HVAC systems are also being placed at the same time permits are filed.
“As early as we can order things, we’re ordering,” Roinestad said.
He’s also looking for substitutions for some of the materials that it needs.
“We’re using more steel, which gives me the fear that in a couple of months steel prices will go up,” Roinestad said. “We can find solutions, but it certainly hasn’t been easy.”