BUFFALO, N.Y. (WBEN) – Despite the high costs of lumber, one local construction professional said it's okay to still plan a new construction project now.
"What we're telling customers is that while we are shocked by what we are seeing with costs, we really don't need to worry about it affecting their end project because we're going to reprice their lumber when we go to order it," Dominic Cortese, owner of Cortese Construction, said. "We're building in a protection plan. We're going to revisit the cost and if the prices neutralize, we're going to issue credits to those customers."
U.S. home construction fell by 9.5% last month. Economics attribute it to builders who are delaying projects because of a surge in lumber prices and other supply constraints. The April decline left construction at a seasonally adjusted annual rate of 1.57 million units, according to the US Commerce Department. This was down from a rate of 1.73 million units in March.
Cortese said he was surprised that there was still a high demand for new construction despite the spike in costs of lumber. He also said he was surprised it finally caught up to the point where there is now a push back on those spiking prices.
"I really do believe that most buyers are just taking pause and just getting used to this new normal to identify how long it will take for things to neutralize," he said. "I predict it's going to happen…Prices have spiked and demand has ebbed, that definitely has to have an impact on reducing costs at some point, especially with lumber."
The high costs of building materials is attributed to several factors. Cortese said slowed production, sputtered reopening, decreased capacity, forest fires, tariffs, and border shutdowns, created a "perfect storm" of factors that led to the rising costs.
"It still has not corrected itself and the demand remains high," he said. "But eventually, with the demand subsiding, the neutralization of the costs has to occur."
Applications for building permits rose 0.3% in April. This is considered a sign of future activity. Cortese said there may be a "post-COVID mentality" of staying close to home and focusing on upgrades, rather than buying a new home.
Lumber isn't the only material that has had rising costs.
Appliances and furniture availability has become more scarce.
Excerpts from the Associated Press contributed to this report. Dominic Cortese is the host of Hammertime Radio on WBEN on Saturday's at 10 a.m.
