Unlike things that you purchase at retail, building material and lumber prices are extremely subject to supply & demand. If demand increases and supply remains unchanged, a shortage occurs and this leads to higher prices. Supply and demand vary throughout the year and from year to year. If nothing else changes, we have reason to expect building materials prices may increase this Spring.
Here are some reasons why we believe the demand for building materials will increase in 2013.
Certain Materials prices tend to be higher in spring and summer. This often includes the price of lumber and building materials.
State of the economy – It’s improving!
The overall level of economy and the growth or decline of new home building has an effect on demand. As new home building grows, the demand changes. Now it has turned the corner and more and more new home construction is underway than last year or year before. Growth is happening here at home in the Kansas City market and nationwide.
Natural disasters or weather disasters that cause destruction of homes and businesses will increase demand and put pressure on the supply. In particular, recent hurricane Sandy is going to generate a tremendous amount of rebuilding/reconstruction over next couple of years. As more and more building materials are ordered on East Coast, the demand is sharply higher and therefore prices will increase. The price of raw materials is affected by changes nationwide. Even though we are far from the East Coast, the nation will be affected by this increase in demand.
Conditions in the industry can have a couple effects. If a large producer shuts down or goes bankrupt, it affects the supply and frequently causes other producers’ prices to go up.
Based on the above, we anticipate the building materials costs will increase throughout 2013 if not longer. It’s not unusual to see those double or triple for a period of many months until the demand changes back. In the past, we have seen a sheet of plywood that normally costs $10 go up in cost to as much as $30.
On Dec. 7th, 2012 Bloomberg reports “Lumber futures rose to a six-year high, extending a 2012 rally that is one of the biggest among commodities, on mounting signs of tighter supplies as U.S. home construction rebounds.”
We frequently hear questions from customers asking when is the best time to build to get the best price. The answer is to build now. Any time you postpone, you are taking the risk of higher material prices.
The sooner you get started with your outdoor project, the better. Now is the best time to give us a call for a free consultation. We look forward to your call. (913) 851 – 3325.
Visit our Archadeck of Kansas City website to see more pictures of our work.