The price of lumber is skyrocketing, rising so fast that local builders and suppliers can barely project the costs from one week to the next.
"The price of everything's going up - wood, drywall, possibly insulation," said Charlie Kremer, owner of Kremer & Co. Construction in Marietta, as he watched his son, Marshall, and helper Nathaniel Sullivan install panels of OSB (oriented strand board) on the roof of a new home under construction in Devola.
OSB is a compressed, chipboard type of material that's used for exterior walls and roofing.
SAM SHAWVER The Marietta Times
Nathaniel Sullivan, left, and Charlie Kremer, owner of Kremer & Co. Construction, are shown beside a wall of oriented strand board (OSB) on a home the Marietta contractor is building along Maple Shade Lane in Devola. The rising price of OSB and other construction lumber can impact the cost of a new home.
"If I had bought these panels a month later than I did, it could easily have added more to the cost of this home," Kremer said.
Starts on new housing construction have been steadily dropping across the U.S., from a high of more than 2 million in 2005, to a low of 562,900 in 2009, according to statistics from the National Association of Home Builders.
The NAHB says increased prices for construction materials, including wood, are at least partly to blame for the decline.
The cost of wood
Lumber prices have been volatile over the past few years. Framing lumber prices have ranged from a high of $490 per 1,000 board feet in July 1999 to a low of $190 in January 2007.
During the first half of 2009, prices hovered around $200. By the end of 2009 they had risen to $250.
The cost of lumber and wood products accounts for one-third of the costs of materials used to build a home.
A typical 2,400 square-foot-home uses nearly 14,400 board feet of lumber and 12,400 square feet of structural panels, such as plywood.
At $350 per 1,000 board feet, the lumber package for a 2,400-square-foot-home costs over $9,000.
Source: National Association of Home Builders, www.nahb.org
R.T. Williamson, manager of Carter Lumber on Newport Pike, said 4-by-8-foot panels of OSB were selling for $7.25 just two months ago, and now the price is up to $12.79 a panel, although the company's profit margin is only a few cents on each panel.
"The price jumped $2 in the past week, and it's supposed to go up again," he said, adding that earthquakes, hurricanes and similar disasters in the U.S. and other countries can create a shortage that affects the price of building materials.
"We're probably looking at mid-May to mid-June before there's any relief," Williamson said.
The weak economy hasn't helped.
"Last year was tough, and the year before that was tough," Williamson said. "This year, we seem to be holding our own, but we have to watch every penny. And people are having a rough time getting the money to build new homes."
He said the price quotes he gives customers on building materials like OSB are only good for Monday through Saturday each week as his cost for those materials are changing from week to week.
Greg Adams, owner of Bob's Quality Homes Inc. in Belpre, has had to make a similar adjustment in his manufactured homes business due to climbing lumber prices.
"We just started adding a lumber surcharge every 30 days," he said. "So I have a 30-day window when I quote a price for a home. After 30 days, if the lumber price goes up, it will be added to the price of the home."
Adams said that 30-day window could also be shortened if at some point in the future his supplier could not guarantee his price for that length of time.
Like Williamson, Adams also noted the impact disasters can have on the home building economy.
"There is a connection. In fact, we see a direct reflection on our business from those catastrophes, and unfortunately the costs get passed on to consumers," Adams said.
A shortage of some hardwood lumber has also affected pricing, according to Jack Haessly, owner of the 54-year-old Haessly Hardwood Lumber Co. in Newport Township.
"Some species, like red and white oak, have increased in price due to a lack of those woods and market demand," he said. "There's also a supply shortage because about 50 percent of the sawmills in the eastern U.S. closed in the past year. Some of those are temporary and hopefully they'll come back."
Haessly said hardwood pricing was very low last year, and the industry is now seeing some improvement, but the housing market is still weak.
"Our industry is still seeing good pricing on woods for interior trim, furniture and cabinetry, and we hope that continues," he said. "And a fair amount of hardwood lumber is going to exports. If not for that export business, the industry would be in deeper trouble.
"The Far East and Europe seem to like our Appalachian hardwoods. It's a worldwide market that we think will continue," Haessly added.
Although workers were laid off from the pallet-building portion of Haessly's business last year, he said the company has been able to continue and business is running steady for now.
"Everything's tied to the economy, but we're determined to see this through," he said.