A spike in lumber prices has compounded the state’s housing crisis, Georgia housing advocates said.
The price of lumber increased by 300% this spring compared with the same time last year, reports show. The building material reached an all-time high of $1,515 per thousand board feet on May 28.
The price of oriented strand board, which is most often used for sheathing, has increased by 400% since last spring.
House Builders Association of Georgia Vice President Austin Hackney said the price increases have added nearly $36,000 since April 2020 to the price of an average new single-family home and nearly $13,000 to a new multifamily unit’s market value.
“It exacerbates the housing affordability crisis,” Hackney told members of the Georgia House Working Group on the Rising Costs of Construction Materials on Thursday.
The working group was created by House Speaker David Ralston, R-Blue Ridge, to exam the peak in construction costs across the state. Its members have been tasked with finding legislative solutions for the problem.
Hackney said most builders had to raise new home prices because of the increased cost of materials.
According to a recent National Association of Home Builders (NAHB) survey, 62% of builders surveyed said they raised the prices on their houses. Another 59% said they have been preordering materials. While Hackney said some others are waiting to list the homes for sale, 20% abandoned their projects altogether.
NAHB data also shows 60% of American households cannot afford the median price of a house at $346,577. Hackney said every time the median price goes up, another 153,000 households are priced out of the market.
Year-over-year average sales prices have increased by 20% in Georgia, according to the Georgia Association of Realtors. The median sales price of a home in Georgia increased by 23% in May to $240,000.
Hackney said the residential construction industry has a significant economic impact on the state. When 42,939 single-family home building permits were issued in 2019, it added $12.3 billion to the construction industry and $1.5 billion in revenue and taxes for local governments, Hackney said. It added 170,000 jobs in the state as well.
Industry experts and advocates also gave testimony on the economic effects of increasing trade jobs and other issues with supply and demand with other construction materials during the more than five-hour meeting Thursday. The group will hold meetings throughout the 2021-2022 legislative session.
“This has been good food for thought,” working group Chair Rep. Marcus Wiedower, R-Watkinsville, said. “We are kind of on a fact-finding mission to incite some thought here.”