With fall in swing and winter on the horizon, the construction industry typically prepares for a seasonal downtrend in production. However, extenuating circumstances have created industry-wide challenges that have resulted in huge lead times, high prices, and material shortages. Let’s take a look at the construction supply chain for fall 2021, the issues that are being experienced, and provide an outlook for when we can hope supply chains should catch up.
The Current Situation
Since the outset of the COVID pandemic, the building industry has been in a state of flux, with rapidly inflating material prices, material shortages, and labor shortages all compounded against a skyrocketing demand for housing. Today, the lingering effects can still be felt from the pandemic and have been exacerbated by other global supply chain issues. Material shortages, labor shortages, and transportation delays are just some of the issues currently afflicting the supply chain.
These challenges have led to a slowdown in building across the board. As highlighted in this article from a California news station, some builders are estimating that project materials that would take four to five weeks to ship can now take as many as 20 weeks. This is representative of the situation across the country that builders currently face. Newer crises are driving even further delays in prices and deliveries. For instance, floods in British Columbia, one of the largest production areas in North America, are currently hampering output and may cause prices to rise further.
Despite the current challenges with prices and delays, the outlook predicts a steady market. Industry experts predict that to remedy a trend of underbuilding since the Great Recession, the home building market should stay booming for years to come. Additionally, builder confidence rose again in the month of November by 3 points, up to 83, its third month over month increase as measured by the NAHB/Wells Fargo Housing Market Index (HMI).
What’s Creating Supply Chain Shortages?
The shortages for building materials are just one piece of a larger global shortage of various products, from semiconductors and dairy products to chicken wings and herbicides. Building materials have faced a long trend of supply shortages stretching back to mill closures at the pandemic’s start. Issues with import slowdown and labor shortages compacted together. While the pandemic’s effects are still being felt, there are other factors at play driving these struggles, including “record-level congestion at the Port of Los Angeles/Long Beach that has spread to the East Coast, the widespread power outages across China, shortages of truck drivers and service workers, and COVID-19-fueled infections and restrictions,” according to Tinglong Dai, a business professor at Johns Hopkins University in comments he recently made to USA TODAY. The compounding of elements is having a particular effect on the building industry.
Consequences for the Building Industry
Consequences are being felt industry-wide. Supply chain shortages have helped fuel higher prices, slower deliveries, and most notably, extraordinary lead times. Compounding the issue is that builders are still facing huge demands from home buyers, who continue taking advantage of lower mortgage rates that have not yet risen back to pre-pandemic levels. Homebuilders are facing higher material costs universally across the board. But the biggest pain has been faced in the realm of lead times, where specialty or pre-fabricated materials such as cabinetry, countertops, and composite decking are all on months-long backorders. However, the shortages and slowdowns extend past the residential industry, as commercial builders face a similar downturn in production driven by supply chain shortages.
What Steps Can You Take as a Builder?
Throughout the pandemic, the message has been the same for builders: communicate about material needs early and often. Though it’s tough for anyone to anticipate how lead times might change or when prices will spike, the team at National Lumber does our best to provide you with up-to-date information as we receive it. By reaching out to us and defining what you’ll need for each product ahead of time, we can do our best to keep you up-to-date and stocked with the materials you need to keep building.
If you’re ready to keep building, contact the team at National Lumber today. Our expert staff is standing by to help you make informed decisions about the materials you need, and keep your project goals on track.