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The Building Materials Market

The Building Materials Market: Prices are Coming Down

After a year of ever-rising prices for lumber and other building materials, we can finally report that the costs of many building commodities are coming down, and supplies are expanding.

How Did Prices Get so High?

A lot of factors contributed to high prices. While the cost of lumber was widely covered in the press, the same factors also directly affected supplies of materials such as PVC, OSB, and the resin used to manufacture subfloor, among others. Here are a few of the reasons prices climbed so dramatically in a short period. 

The Pandemic

  • Pandemic-related shutdowns at lumber mills reduced capacity.
  • Meanwhile, demand surged as people staying home began record numbers of home-improvement projects.
  • Stimulus payments and historically low interest rates put money in many homeowners’ pockets to build through contractors or on their own. 

The Weather

  • Devastating wildfires in the Pacific Northwest early in 2020 limited access to timber.
  • Later in 2020, hurricanes hit McCoy’s states on two different occasions, disrupting supply chains and increasing demand for materials for rebuilding.
  • The winter storm in 2021 caused further shortages and supply-chain disruptions.

Why Are Prices Falling Now?

As certain businesses were deemed essential services, workers in those industries returned to work, and production slowly resumed. However, widespread labor shortages resulted in a very gradual increase in materials flowing through the supply chain. Commodities with little processing made the most extensive inroads to recovery, while manufactured goods that require multiple components and processes lag behind.

Surprisingly, the weather had a positive impact. In the late spring, wet weather throughout the South slowed demand leading into the summer months. Additionally, as homeowners returned to near-normal activities in many locations, DIY demand slowed, opening up supplies for contractors.

Interest rates remain low at the moment, enabling consumers to purchase homes and to invest in renovations of their existing homes.

What is the Status at McCoy’s?

We have seen significant decreases in costs in all lumber species over the past few weeks. Lumber costs are now close to what they were in Spring 2020. Here’s what we see now about some of the lumber and other building products that are in high demand.

  • Treated Lumber:
    Supply is opening up with demand primarily from builders rather than DIY customers. Prices have decreased more than 60% in the last three months.
  • Framing Lumber:
    The framing lumber supply is stable again for the first time in many months. Demand slowed through May and June compared to the fast pace seen in March and April, and we have seen the market make a significant correction. Since the end of May, framing lumber is down more than 60% and now appears to be stable.
  • OSB and Plywood:
    Supply is no longer an issue on both plywood and OSB, with the availability increasing dramatically in recent weeks. OSB and plywood pricing has dropped more than 50% since the beginning of July.
  • Radiant Barrier OSB:
    Like standard OSB and plywood, there is now an adequate supply of this product, and prices have also dropped more than 50% since the beginning of July.
  • 3/8” Rebar:
    We have a good supply of all sizes of rebar committed through October. However, rebar is made primarily of recycled materials, and pricing depends on the cost of scrap metal. Pricing on rebar is now some of the highest we have seen in more than ten years.
  • Remesh:
    We currently have a solid supply of the 750 square foot rolls. However, prices of 8’X20’ remesh mats in both 10-gauge and 6-gauge continue to climb with higher scrap pricing.
  • Insulation:
    This entire category is still very tight. Lead times are now between six and eight weeks. However, we have increased our direct allocations with key vendors to bring in additional product where possible.
  • T-Posts:
    Lead times are still extended, but we continue to work strategically with our key vendors to ensure access to supplies at our distribution centers and individual stores. Delays may occur, but we are placing orders now with longer lead times to accommodate our customer’s needs into the future.
  • Engineered Subfloor: 
    Subflooring is in very short supply in both 3/4” and 1 1/8” due to a shortage of the glue used in its production. The initial shortage began with the winter storm in February and has continued to worsen in the last several weeks. Please check with your local store for availability and alternatives.
  • Windows, Doors, and Siding:
    Due to the shortages of resins and other components, we continue to see longer-than-normal lead times on various types of windows, doors, and siding. Many manufacturers have limited the orders they can accept, so we continue to work with as many distributors as possible to gain access to supply. 
    In some cases, we have taken the step of suspending the regular replenishment of stock windows at certain stores. To continue to serve our customers, even these locations will have the option to place special orders from our distribution center. We continue to advise that you contact your local store for lead times and detailed information on specific product lines or advice on alternatives with greater availability.

The Market Continues to Change

Prices and availability are continuing to shift even as supply chains open up. If you have any questions about these or other products, please let us know by calling our hotline at 1-877-542-8986 or dropping by one of our stores. Our hard-working merchandising and pricing teams continue to seek creative ways to keep the materials you need in stock and make them available at the best possible price. We’re here to serve - let us know how we can help.