For several years now, the recovery in single-family home building has been hampered by shortages of labor and lots. Availability of building materials, meanwhile, has not been much of an issue. But that may be starting to change.
In answer to questions on the May 2017 survey for the NAHB/Wells Fargo Housing Market Index, 21% of single-family builders reported a shortage of framing lumber. Although still well below the share currently reporting shortages of lots and labor, this nevertheless marks a clear movement on the building materials front since 2014, when no product or material was cited as being in short supply by more than 15% of builders.
That was still true for most building materials in the May 2017 survey. Next to framing lumber, the most widespread shortages reported in 2017 are for ready-mix concrete and trusses, with 14% of builders currently reporting shortages of each.
For nearly all of these materials and products, the recent history has been relatively stable, with the share of builders reporting shortages moving only a couple of percentage points between 2014 and 2017. Framing lumber is the single, notable exception. In 2013, it looked as though a problem with the supply of framing lumber was starting to emerge, but the situation subsequently eased. Only 8% of builders reported a shortage of framing lumber in July of 2014 and 7% in July of 2015. But then, the share more than doubled in May of 2017, to 21%—a post-housing recession high. The last time framing lumber shortages were as widespread as they are now was in October of 2004, at a time when the annual rate of housing starts was hovering around 2.0 million (compared to the current rate of about 1.1 million).
The rising share of builders reporting shortages of framing lumber is consistent with recent increases in prices for softwood lumber. It is virtually certain that an underlying factor contributing to the shortages and price increases is the ongoing softwood lumber trade dispute between the U.S. and Canada, including the duties on lumber imported from Canada levied by the Department of Commerce in 2017. NAHB analyzed the economic impact of these duties, the latest of which was announced on June 26, in a previous post.