A New Year always brings on the excitement of new goals and resolutions! For home building, as 2021 was winding down, we thought we saw a light at the end of the ever-changing “tunnel,” but not so fast. There are still lingering supply chain issues, lumber pricing, and interest rate increases that are affecting new home pricing and your buying power.

LET’S TALK LUMBER:

In the last week of 2021, the home building industry saw the largest one-day spike in lumber cost.  “According to tradingeconomics.com’s commodities index, lumber is up 40.5% this month and 32.75% for the year. For comparison, the next closest monthly spike in the “agricultural” category is coffee, up 12%.”

The framing lumber for a new home is the single largest item needed for construction and has pushed pricing on homes that are not framed in every Ivey community. Currently, base and inventory homes pricing are being monitored and adjusted on a weekly basis. Jay Frye, Ivey’s Purchase & Estimating Manager, said, “We’ve seen increases in cabinets, drywall, gutters, and siding… almost anything with metal,” Frye said. “The first of the year always brings increases, but the demand just still far outweighs the supply.”  Jay went on to stay, “On Trading Economics, it’s showing that lumber will continue to go up and be really high until maybe October,” Frye said. “And even then, the plateau will still be much higher than what we’re paying now. They just can’t make the product fast enough.”

To help alleviate some unknown pricing changes for our homebuyers, Ivey Homes started offering homebuyers more forecast pricing due to the rapid changes. This pricing, while higher, is set once the contract is signed. Ivey forecasts a sales price depending on the pricing trend. This allows Ivey to continue to build homes and gives the buyer peace of mind.

SUPPLY CHAIN WOES:

The beloved supply chain we’ve all received a crash course in continues to delay items needed to build a home. One of the largest items is windows. Current window orders are taking 12-14 weeks to deliver. Windows are key due to getting the framing complete and passing all the local county inspections. The home gets to a certain point in construction and it must stop until the windows are installed.

At the end of the home’s construction, should a window be broken or need replacing, this can also delay construction due to the large lead time on this one item. Supply chain woes are not the only item itself, the truck drivers to get the product here are in short supply and then the labor to install the product. Talk about a domino effect!

NEWEST TO THE MIX… INTEREST RATE INCREASE:

Those watching the housing market have heard the rumbling of increased mortgage rates since the middle part of last year. We knew it was coming and well…. here we are! The first few weeks of 2022 saw an up and down with rates forcing lenders to scramble to lock in rates. An increase, even small, will affect a buyer’s buying power, pair this will the increases in housing and building prices, it becomes a double whammy!

Best advice… buy now and do not wait. Rates and prices will continue to rise and the dream home you have been eyeing could cost you more next week.

If 2022 is your year to make a move Ivey Homes would love to help guide you through the process. Connect with us online www.iveyhomes.com/contact-us

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