Thursday, March 18, 2021

SERIOUS INFLATION: New Houses Are Costing More to Build as Prices Jump for Wood, Bricks and Other Raw Materials

Prices are surging for the raw materials used to build American homes.

Lumber, one of the biggest costs in home-building after land and labor, has never been more expensive and is more than twice the typical price for this time of year, reports The Wall Street Journal. Crude oil, a starting point for paint, drain pipe, roof shingles and flooring, has shot up more than 80% since October. Copper, which carries water and electricity throughout houses, costs about a third more than it did in the autumn.

Prices for granite, insulation, concrete blocks and common brick have all pushed to records in 2021, according to the Bureau of Labor Statistic.

Materials producers like paintmaker Sherwin-Williams Co. and flooring manufacturer Mohawk Industries Inc. as well as builders D.R. Horton Inc. and Hovnanian Enterprises Inc. HOV 10.98% have been raising prices.

Builders boosted prices for nearly three-quarters of all floor plans offered during January, according to RBC Capital Markets.

Folks, this is only the beginning with the Biden administration launching a $1.9 trillion spending program on top of the Trump spending in 2020, there is going to be plenty of money around to push prices higher. 

I also expect major advances to continue in food, energy and clothing in the months ahead.

You just can't print massive amounts of new money out of thin air and expect price inflation not to explode---although remarkably Fed members expect prices to stay relatively tame with a 2021 price inflation rate of only 2.25%.

They have no clue and thus will be slow to respond to accelerating price inflation---thus allowing it to get way out of hand.

Their shallow models are misguiding like never before.


1 comment:

  1. There goes that new, wrap-around deck I was considering having built on the house I bought last summer. I guess I'll focus on trees, shrubs and other landscaping.