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Builders face higher lumber costs / labor shortage

January 20,2018-

Home builders are being squeezed by both higher lumber prices and a shortage of labor, each exacerbated by Trump administration policies

Lumber prices have climbed to near $500 per thousand board feet affected by the US tariff on Canadian lumber, which comes amid talks to renegotiate NAFTA .
The price has nearly doubled since January 2016 and stood at $325 a year ago, when Trump took office.

Extreme weather related wildfires are also pushing lumber costs higher even as fires in urban areas, and hurricanes elsewhere has pushed ups demand.

As for workers, builders are nervous about finding skilled labor in 2018 as more ICE raids are publicized across the US.

Comerica Bank recently stated “The state’s important residential construction sector will face some challenges in 2018. Even before the fall wildfires, California’s construction industry was facing a labor shortage. Trade groups report ongoing difficulties in finding workers. Also, we expect mortgage interest rates to gradually increase in 2018, reducing housing affordability. “

Increasingly, the industry is dependent on immigrant labor.

“New NAHB research shows that the share of foreign-born workers in the US construction labor force has been rising since the housing recovery got underway. Immigrant workers now account for close to one in four workers, the highest share recorded by the American Community Survey (ACS). The time-series analysis shows that the rising share of immigrants in construction cannot be explained by an unusually high number of immigrants joining the industry. Rather, a slow, delayed and reluctant post-recession return of native-born workers underlies the shift towards the higher reliance on immigrants in the construction work force.”

An economist for this homebuilders organization says “Topping the list of problems builders faced in 2017 and expect to face in 2018 is the Cost/Availability of Labor, a significant issue for 82% of builders in 2017 and one that has significantly grown in importance since 2011. That year, 13% of builders rated labor as a significant problem, followed by 30% in 2012, 53% in 2013, 61% in 2014, 71% in 2015 and 78% in 2016.”

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