Though the COVID-19 economic crisis has helped, not hurt, the housing market, homebuilders say supply chain disruptions and cost increases caused by the pandemic have made it more challenging in recent months to do their job.
Appliances, components and certain raw materials have, at times, been hard to come by, as manufacturing facilities around the country and the globe have had to shut down or scale back output, and there’s no way to predict when something might suddenly no longer be available.
“ACs, windows and shingles have all been a problem,” says Scott Bardwell of Bardwell Homes. “Shingles will just randomly disappear—suppliers are like, nope, we don’t have them anymore. And it’s different for different people at different times. All of a sudden, you can’t get something you need.”
For Carlos Alvarez of Alvarez Construction, procuring AC components has been one of the biggest headaches. The builder has been buying units in bulk and storing them for months in advance so that when he’s ready to install one in a new home, he’s assured of having it on hand.
He’s had to discontinue the company’s free refrigerator promotion, however.
“The manufacturers were so backed up, we couldn’t assure the homebuyers we would have refrigerators for them,” Alvarez says. “So we had to stop offering them.”
Not only are manufacturing facilities contributing to the problem but ports around the globe have gotten backed up, which has made it difficult to get certain raw materials from overseas.
“Even if something is made in America, the components often come from China or somewhere else,” says Level Homes’ Todd Waguespack. “Also, it’s taking much longer to get the marbles and stones that come through the ports from overseas. Things are much slower.”
The devastating hurricane season along the Gulf Coast didn’t help matters. A large regional distributor of interior doors that supplies many of Alvarez’s homes is based in southwest Louisiana and was hit hard by two hurricanes earlier this fall.
“So there have been some major hiccups with their production,” Alvarez says. “Then, there have been issues with the distribution channel. Companies are restricting the number of drivers on the road or the drivers are getting sick.”
The disruptions are causing price increases at a time when lumber costs are skyrocketing, in part because of COVID-related demand. Over the past 12 months, lumber prices have nearly doubled from where they were a year ago, Bardwell estimates, though they have come down somewhat in recent weeks from their high in early fall.
The cost increases have meant slimmer margins for builders, who say they’re trying not to pass the costs on to their customers, though that isn’t always possible.
“We don’t normally raise our prices,” Bardwell says. “But we did raise them a little bit and it slowed our sales. We had to, though. The cost increases were just too significant.”
With the arrival of a COVID-19 vaccine and the promise of a new year, some are expecting problems to be resolved in early 2021. Realistically, however, Bardwell predicts the disruptions and related cost increases will plague builders for months to come.
“On the supply side, things are going to be hard for a while,” he says.
