their industries suffered near catastrophic shutdowns during the heights of 2020. Lumber prices have risen 97% since last year, with iron and steel not too far behind with a 73% y-o-y increase. Plywood is the real elephant in the room, showing a year-over- year price increase of a staggering 144%. The high price point of materials would have been bad enough, but the adjacent issue of material scarcity really drives the problem home. The National Multifamily Housing Council’s June 2021 Construction Survey shows that an incredible 86% of developers reported that business had been impacted by a lack of materials. The same survey also showed that 100% of developers surveyed acknowledged the rising costs of construction materials, and 69% even reported entire deals being repriced upward by over 5%. Supply shortage and pricing aside, the next largest contributing factor to the slump in the construction industry has been the labor shortage. Much like the choked supply chains for materials, the pandemic naturally caused an incredible shortage of laborers and skilled workers. Whether through quarantine, xenophobia, lockdowns, or untimely passing, Covid-19 has greatly thinned the workforce. Nationally speaking, the United States is still down 6.8 million workers since the onset of the Covid-19 shutdown back in March 2020 according to the Bureau of Labor Statistics, and with construction jobs seeing a 14% decline over that period, it’s safe to say the industry contributed heavily to that figure. As it is now, supply chain disruptions and increased competition for construction labor are holding the industry back and keeping it well behind the pace of a growing housing demand. Many metro areas are experiencing an influx of new residents with very little new inventory to offer. Even so, at least one of these ailments is showing signs of abating.
At the time of this writing, many manufacturers have caught up or have come close to catching up to their pre-pandemic output. Hopefully, this causes a correction in prices and puts a halt on market volatility, though nothing can be promised. There is no guarantee that pre-pandemic prices will ever return, but it is widely agreed that the current prices are simply no good for the entire industry. Still, the material cost of supplies dropping back into reasonable affordability is at least one less problem to worry about.
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