Contractors and builders are being forced to turn to alternative sources for key construction materials due to widespread supply shortages, resulting in surging prices amid growing demand for new homes, The Wall Street Journal reported.
Construction companies are turning to new sources for building supplies, including wood paneling, ceiling joists, and pipes, as shortages due to supply chain disruption have caused prices to skyrocket, the WSJ reported.
Builders argue that they would rather pay the premium for alternative supplies rather than delay projects for months while waiting for manufacturers to catch up, according to the WSJ.
Crowded ports in Asia and massive labor shortages in the U.S. have helped create global supply chain disruptions, reducing available materials and causing a spike in prices, the WSJ reported. There are currently 10.9 million jobs available in the U.S. with the country experiencing a 5.2% unemployment rate, according to the Bureau of Labor Statistics.
Global semiconductor shortages have made home appliances more expensive and less available, the WSJ reported. General Motors experienced a 33% reduction in sales which the company attributed to the global bottleneck in semiconductor chips, according to GM’s Q3 sales report.
Whirlpool Corp, one of the largest appliance companies in the world, said in March it’s chip deliveries fell short of orders by roughly 10%, making it increasingly difficult to keep up with demand, Reuters reported.
Parker Young, president of Straub Construction, told the WSJ that he was forced to switch insulation materials after the summer storms in Texas halted production, costing him roughly $20,000. He decided to pay the premium for supplies rather than waiting for original insulation, which would have added six to nine months.
“It’s unprecedented,” Young told the WSJ. “I’ve been in the industry for 30 years and never seen anything like this.”
The surge in prices for building supplies comes during low inventory for homes and spiking demand, according to the WSJ. The S&P CoreLogic Case-Shriller National Home Price Index, measuring average prices in major metropolitan areas in the U.S., rose almost 20% at the end of July, the highest figure since 1987.
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