Cost to build a new home is increasing as lumber prices skyrocket
MYRTLE BEACH, S.C. (WMBF) - Lumber prices are skyrocketing, adding thousands of dollars to the cost of building a new home.
Currently, lumber prices are up about 180% since last spring, adding $24,000 to the cost of building a new single-family home, according to the National Association of Home Builders.
Custom home builder Korbin Causey said if people aren’t in line to buy the supplies for building a home months in advance of when they’re actually needed, the home won’t be ready in time.
Causey said a sheet of OBS used to cost about $8 a few years ago and it’s now about $30 per sheet. Home builders use it for walls, floors and roof decking, as it’s an essential component of the building process. He said not only are lumber costs higher, but it’s even harder to get.
“I tried to buy a thousand sheets of OBS a few weeks ago and I was basically denied,” Causey said. “They said if they sold it all to me there would be none left for everyone else. So basically you’re seeing companies can’t even supply the materials needed to build a house.”
Causey said manufacturers don’t have enough people in the plants to make the supplies, they don’t have the material to make it and the supply given is nothing compared to the demand.
NAHB said the spike is also causing many sales to fall through and forcing builders to put some projects on hold when home inventory is already low.
Causey said it’s all based on supply and demand. He said in Horry County there are less homes on the market than there are agents, meaning the supply for houses has gone down but the demand is up. This is driving people to multiple offer situations on the mortgage and real estate side for the same home.
Causey is also the area manager of RMS Mortgage and understands all sides of the housing industry in the Grand Strand. He said right now homes are worth a lot more because it would cost a builder 25% to 30% percent more to build the same home. He added it’s causing appraisal values to go up and houses to sell for more than before.
”That same home that was $130,000 in 2015 is probably $180,000 now because of the cost of duplicating it,” he said. “Your home is always valued at what we can duplicate the home for. It’s never valued at what it cost to build it when you build it; it’s valued at what it’s going to cost me to rebuild it now.”
Causey said lumber prices going up is a direct reflection of what a person’s house is worth and said right now a person’s home is at the peak.
He said for people out there looking to buy - while it will cost more - it’s still a good time to purchase because mortgage interest rates are low.
Copyright 2021 WMBF. All rights reserved.