Building Materials Shortage, Rising Costs Hit North Jersey

NORTH JERSEY — There’s only so many times in most people’s lives when they’d be interested in the cost of lumber or other building materials. So for those who aren’t yet up to speed with the challenges facing the construction industry right now, let’s start here:

The price of building materials has soared to record highs, causing materials shortages and also delays in building projects.

This information comes from the Bureau of Labor Statistics latest Producer Price Index report, and shows that the price of building materials has increased by more than 19 percent over the past 12 months.

That fact stands in stark contrast with yearly trends and averages from the past decade, and is even more jarring when considering that prices have soared by nearly 20 percent even after a decline in framing labor prices over the past few months, the National Association of Home Builders writes.

But don’t mistake that drop in prices as a sign of relief, as prices for building materials have dropped just twice since December 2019. And it’s not like the drop actually helped those facing rising costs all that much.

David Logan wrote in the NAHB blog “Eye On Housing” that the Producer Price Index for softwood lumber decreased by 29 percent in July. That was the largest monthly decline since tracking on softwood began, but the product still remains nearly 72 percent higher than the January 2020 level.

The NAHB sent a survey to builders in May, seeking to hear their observations on this rise in pricing. According to the results of the survey, most reported that the materials to build the same house have risen on average by 26.1 percent from June 2020.

Nearly none of those polled — 3.1 percent — said prices increased by less than 10 percent, and some builders even reported that costs rose by 50 percent or more.

The organization has included this question six times on the questionnaire since 2012, the NAHB said. As you may have guessed, this increase is the largest ever recorded, handily beating the prior high of 6.1 percent.

And the problem is being felt on pretty much every level of the supply chain in North Jersey, from independent contractors to your neighborhood hardware store.

Chris Jeffrey is the manager at Marsala Hardware on Broadway in Hillsdale. Reached by phone on Friday, Jeffrey said the store was short-staffed with other employees on vacation, but his succinct observation detailed the problem perfectly.

“Everything’s gone up, and I can’t get anything,” he said.

But why is that?

Speaking to the Asbury Park Press, Rudi Leuschner, a professor of supply chain management at Rutgers Business School in Newark, explained it like this:

"When you think about any product that will end up in a retail store or at a contractor, that product until it gets there changes through a number of hands," he said. "And at each point in that process there's a chance that it gets delayed, or there's a chance that it just gets stuck somewhere. And then all of these little things add up to bigger delays and bigger outages and so on."

These shortages, and a lack of products on store shelves, should be familiar to everyone who was living in North Jersey in the early days of the coronavirus pandemic, when toilet paper and food products were hard to come by.

Some of these delays can be attributed to delays in shipping, ramped up even more by shortages in other industries, including a shortage of truck drivers.

Also speaking to the APP, New Jersey Institute of Technology Professor Sanchoy Das explained that normal shipping and product movement operations are beginning to resume after companies shifted down operations during the early days of the pandemic. But there’s only so much those industries can do to speed up the process.

“Shipping lines went to almost zero for a while and now they are suddenly in a boom time. The number of ships is kind of fixed. You can’t build a ship overnight.”

And it’s not just contractors and hardware stores that are dealing with the repercussions of this time of logistical hardship.

Wayne Public Schools Superintendent Mark Toback said the district has been experiencing difficulties with their transportation service due to the nationwide shortage of drivers across the transportation industry.

This has affected bus routes in the district, sure, but has also caused hardships in another area.

“The problem with a lack of drivers across all industries influences many things beyond the day-to-day transportation we offer to our students,” said Toback. “The shortage of delivery drivers means that our food service vendor, Sodexo, is not receiving the food items they’ve ordered from Sysco, their food supplier.”

It’s not yet clear how quickly the market may regulate. Toback noted that media coverage has helped the district find interested bus drivers, but that’s an incredibly small sample size.

However, another snapshot of the industry will be available this month, as the Producer Price Index for September is set to be released on Oct. 14.

Until then, heed Chris Jeffrey's warning before planning your next home improvement project.

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