Home Improvement

The cost to build or renovate a home is way up. Here’s why and how much

At a time when we desperately need new homes, we are paying more for, and having a harder time finding, the materials to do it.

Since the turn of the 21st century, residential construction hasn’t kept pace with historical levels, leaving the United States with a deficit of more than 5.5 million homes. adobe stock

You don’t need an economics degree to understand why the median price of an existing home was up an astonishing 23.6 percent year over year in May: There are more people who want to buy properties than there are homes for sale — like, millions more.

Since the turn of the 21st century, residential construction hasn’t kept pace with historical levels, leaving the United States with a deficit of more than 5.5 million homes, according to a report by the National Association of Realtors. The NAR says it will take years of accelerated home construction — a full decade of building 2 million homes a year — to make up for that shortfall.


One big problem? At a time when we desperately need to build affordable homes, it’s increasingly expensive or difficult to source basic construction materials and other housing supplies, such as framing lumber, plywood, and appliances.

Wood costs skyrocket

In a May survey by the National Association of Home Builders, single-family builders said their material costs had increased an average of 26.1 percent from a year earlier just to build the same house — the largest single-year jump in the survey’s history. Higher lumber prices alone added almost $36,000 to the cost of building an average single-family home, according to the NAHB.

After doubling last summer and then briefly falling, the price of dimensional lumber — think common wood boards, such as 2-by-4s — more than tripled from October 2020 to May 2021. Prices have eased a bit in recent weeks but remain high: Lumber futures contracts were trading at $797 per board foot at the end of June — 84.7 percent higher than a year earlier and roughly double the June 2019 price.

But it’s not just lumber. The cost of copper wiring, for example, has increased almost 40 percent from a year ago, according to the Bureau of Labor Statistics’ Producer Price Index for May. And to make matters worse, it’s gotten harder to find: Seventy-seven percent of home builders the NAHB surveyed said they had encountered at least some shortage of copper wire.


The price of gypsum wallboard (drywall), meanwhile, has risen more than 16.1 percent in a year, and 70 percent of builders surveyed by the NAHB had some trouble sourcing it.

And more than half of builders (54 percent) have seen a serious shortage of oriented strand board, or OSB — those structural panels of wood fragments and shavings glued together with resins to create a plywood-like material often used as sheathing for roofs and walls. As you can imagine, it’s hard to build a house without, you know, walls.

“Oriented strand board has been extremely difficult to come by for builders in 2021,’’ said David Logan, NAHB’s director of tax and trade policy analysis. That’s partly due to the winter storms that took out much of the petrochemical industry in the South, he said, particularly in Texas. “They actually make the resins and adhesives that are used to stick OSB together.’’

Since petroleum is also a key ingredient in PVC piping — the white plastic drains beneath your sinks — the supply of plumbing materials has been disrupted as well. “The construction industry supply chain has been sort of a terrible example of the butterfly effect in real life over the past year, where a winter storm in Texas can affect the price of PVC pipe in New York,’’ Logan said.



Tempering expectations

Builders have felt the impact of price hikes and product shortages and are doing their best to set expectations with clients and to mitigate delays that are largely out of their control.

“From building materials to the fixtures and finishes and appliances and mechanical equipment, everything has really seen an impact one way or the other, whether we’re paying premium costs for it or we’re dealing with delays or delivery dates that don’t really mean anything,’’ said Nick Schiffer, owner of NS Builders in Avon.

It’s taking weeks or even months longer than usual to secure even common building supplies. “Plumbing fixtures, we’ve seen upwards of sixteen weeks; appliances, we’ve seen as much as four or five months,’’ Schiffer said. “We own a cabinet shop, so for plywood, we’re typically seeing a couple of days to maybe a little over a week just to get that stuff in stock.’’

“Custom windows used to be four to six weeks — they’re flat out twelve weeks now,’’ said David Cohen, owner of Hampden Design in Newton. Kate Durrane, principal of Columbia Contracting in Natick, said one of her preferred window suppliers recently bumped its lead time to 18 weeks. And while Durrane said she hasn’t had trouble securing tile yet, Cohen has seen lead times for some tile swell from two weeks to eight.


“A supply chain tends to be an all or nothing proposition,’’ Logan said — if one part breaks, the whole thing falls apart — and a confluence of factors is tugging at those chains from all sides. Shipping ports have been overwhelmed by an increase in import demand, with container ships waiting days or even weeks to dock on the West Coast. A drop in the US dollar’s value has made Canadian lumber and other products — already subject to tariffs — even more expensive. And underpinning everything has been an insatiable demand for housing and remodeling.

“Businesses had to close, including manufacturers, at the onset [of the pandemic], and production was brought back online but wasn’t done so at a rate that reflected the increase in residential construction,’’ Logan said. “That just put the whole industry behind the eight ball, and ever since then, we’ve been playing catch-up.’’

So builders are following a new blueprint: Communicate the challenges, get design decisions pinned down much sooner than usual, and order products as early as possible.

“It’s about being flexible and really encouraging people to make their selections very early on in the process so that we can get those things in time,’’ Durrane said. “I’m looking at a box of hinges in my office right now that I ordered three months ago just because I was afraid I wasn’t going to get them. As soon as I have the selection, I’m ordering.’’


In addition to project milestones like “finish rough electrical’’ and “install countertops,’’ Cohen also includes client selection deadlines in his construction timelines — “choose countertops’’ or “select bath fixtures,’’ for examples — and has now moved these dates ahead by several weeks in his schedules.

“It feels kind of artificially early — they’re demolishing, and you’re picking out tile,’’ Cohen said. But it’s become essential to make those decisions as early as possible even if it feels abstract. “You need an architect or an interior designer with the vision to understand that we’re picking things for a space that doesn’t exist right now.’’

Dave Supple, architect and owner of New England Design and Construction in Boston, said his firm’s design-build approach has helped them limit delays because the people who specify a finish “are also the ones who are going to purchase it, get it on site, and install it.’’ But he hasn’t been immune to increased prices, estimating that the cost of an addition has gone from roughly $350 to $400 per square foot to $450 to $500 a square foot. “We do adjust our costs yearly, but this was definitely a larger increase,’’ Supple said.

Appliances have the longest lead times

“Products are more expensive. That’s undeniable,’’ Durrane said. “Lumber itself has gone up, windows have gone up, hardware has gone up — everything.’’ In terms of delays, Durrane said appliances have the longest lead times, though it depends on the type and brand. “Refrigerators are really hard to get. Sub-Zeros, I think they’re running six months, maybe more,’’ she said.


Steve Sheinkopf, chief executive of Yale Appliance and Lighting in Boston, suggests ordering appliances at least six months ahead of time. “Pre-pandemic, you could choose from probably ten different manufacturers in whatever price range you wanted — it was that easy,’’ he said. “Now it’s anything but.’’

Part of that is because appliances are made in many locations from parts produced all over the world — a complex supply chain that Sheinkopf said helped hold prices down for most of his 30-plus years in the business. But the rolling, global nature of the COVID-19 pandemic — in North America alone, it first affected warehouses in New York and New Jersey, then appliance factories in the South, then parts manufacturers in Mexico — combined with shipping container backlogs and “exploding demand’’ from consumers has strained or broken many of those supply chains.

Quoting an industry adage, Sheinkopf said, “If it takes eighty-four parts to make a dishwasher, and you only get eighty-one, you’re not shipping the dishwasher.’’

Major appliances aren’t just in short supply, they’re more expensive, too. “Since 2018, I would say the price of appliances is up probably fifteen percent, if not more,’’ Sheinkopf said. “Plus, all the promotions that people did — like those ten- to thirty-five-percent-off sales for Memorial Day or Labor Day or Black Friday — those are gone.’’ Sheinkopf doesn’t expect things to settle down until at least 2022, maybe even 2023.


Appliance backlogs are among the most dramatic, but, as Sheinkopf said, “We could be talking right now about pools or decks or any of that stuff.’’ He’s right: A salesman at New England Spas in Natick said that, while some best-selling hot tub models were in stock because the store preordered them months ago, most special orders now take a year to come in and prices have risen, too. “It depends on the type of tub, but mostly we’re looking at next summer,’’ he said.

Other costs pile up

Decks have gotten more expensive along with lumber prices, while other outdoor projects are affected by shortages.

“Concrete pavers, composite decking, and even bluestone have been difficult to obtain,’’ said Jennifer Nawada Evans, owner of Nawada Landscape Design in Boston. “I’ve had to wait one to three months on pavers and decking.’’

Even trees and shrubs have been tricky to get, Nawada Evans added. “Normally you can just walk into a nursery and get what you want, but now in order to ensure your plants are at the nursery when you get there, it’s best to order and tag your plants,’’ she said.

Paint is in short supply, too, partly due to the winter storms in the South.

Mauro Henrique, owner of Mauro’s Painting in Somerville, said he recently ran out of exterior trim paint in the middle of a job, and just needed a couple more gallons to finish up — but he couldn’t find a store that carried anything less than five-gallon tubs of the base paint.


“I called two local paint stores, and they didn’t have it,’’ Henrique said. “I ran out to my go-to paint store, and my guy said the same thing: ‘We don’t have the single gallons, and we don’t know when we’ll get them in.’ ’’

Even garbage disposals are on backorder, said Norwood plumber Sue Jacobs-Marshalsea — who is, like the other contractors, on something like backorder herself. “I’m still two to three months backlogged,’’ she said.

Jon Gorey blogs about homes at HouseandHammer.com. Send comments to [email protected]. Follow him on Twitter at @jongorey. Subscribe to the Globe’s free real estate newsletter — our weekly digest on buying, selling, and design — at pages.email.bostonglobe.com/AddressSignUp. Follow us on Facebook, LinkedIn, Instagram, and Twitter @globehomes.


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