Change is the Only Constant

Locally and nationally the housing industry in the third quarter remained very strong. We have not seen the final results for September, but expectations are that it will be similar to July and August. Nationally the housing industry produced 1.615 million starts in August, ten plus percent over the prior year same period. January through August 2021 the U.S. has produced 18.9 million homes per data. 

All the while through a robust building cycle our industry has faced many challenges as we have spoken to in past newsletters. Recently, lumber has fallen to a reasonable level, but we are starting to see a weekly increase here as well. With the winter and year-end setting in, our hope is that lumber will flatten and remain relatively consistent. The forecast for lumber is cloudy at best. Lumber has always been considered a volatile element to our industry where other items such as nails, hardware, truss connectors, hangers and the like have remained fairly constant. Recently these and many other items have all announced significant cost increases.

Some examples of these increases; nails have increased 100% in the past year. Shipping container rates have hit an all-time high and have sailed past $20,000.00 per container from China to the US. Fuel is on the rise and the cost of CDL class drivers is viewed as a premium position and is demanding higher pay rates. Steel is trading 200% higher in September than in March of 2020. All of these items and many others are contributing to higher costs across the board and unfortunately are offsetting a large portion of the perceived savings our industry is starting to see from the recent decline in lumber cost. 

As of the most recent information we can find the U.S. largest ports, Los Angelis and Long Beach CA have record breaking counts of ships anchored waiting to be given the approval to enter the port. Along both the east and west coast estimates are approaching 200 ships waiting to enter various ports. Once these ships are granted access to the port they will then wait to be offloaded due to labor and truck shortages for periods far longer than normal, further aggravating the backlog. Marine traffic website is an interesting site to visit to get a real-time view of cargo vessels worldwide and traffic in our eastern and western ports. 

Another concern beyond shipping, cost increases and labor shortages is the widening gap between housing permits, starts, and completions. Permits are slightly outpacing starts but both are drastically outpacing housing completions which is exacerbating the complications our industry is facing today and extending overall building cycle time. A home 2 years ago that would take 9 months to build is now 12-15 months with no guarantee to the client when it will close which is unprecedented.

At the end of all of these uncertainties and increases we are grateful that we get to be a part of the housing industry. We are thankful for our clients, vendors, suppliers and co-workers. We appreciate the hard work everyone in our industry is putting forth and we wish you and yours a Happy Thanksgiving!