Commerce Secretary Meets With Homebuilding Officials Over Supply Chain Concerns

The U.S. Commerce Secretary met with senior homebuilding officials last week to decide how best to address the supply chain constraints currently plaguing the nation.

UPDATE (June 2nd, 2021)— U.S. Commerce Secretary Gina Raimondo met with senior officials from the National Association of Home Builders (NAHB) last week to address the negative impact that issues within the supply chain are having on home building in the U.S. In the meeting, Secretary Raimondo reaffirmed her and her staff’s commitment to finding a solution to the rising cost of building materials and pledged to work with the NAHB to take concrete action on the biggest problem currently facing the housing industry.

“The residential construction industry is facing serious challenges because of supply chain constraints and the impact on home building, especially with respect to affordable housing. Today was a productive, positive conversation to begin to address these challenges,” said Secretary Raimondo. “We take these issues seriously, and my staff and I are committed to continuing to work with all stakeholders, including reviewing relevant data and conducting analysis to identify targeted actions the government or industry can take to address supply chain constraints.”

Lumber prices took center stage at the meeting, with several NAHB officials highlighting some of the main causes for the rising cost of lumber over the last year. NAHB First Vice Chairman Jerry Konter raised concerns over sawmill activity, claiming that mills have not increased production enough in the face of heightened demand for lumber.

“U.S. sawmill output increased 3.3 percent in 2020. But over the same period, single-family construction increased 12 percent to almost 1 million housing starts, and the remodeling market expanded 7 percent,” said Konter. “We feel this mismatch between domestic production and rising demand for building materials is at the root of the unsustainable increases in lumber prices.”

Other NAHB officials pointed to better forest management and a long-term trade deal with Canada as ways in which the lumber price crisis could be mitigated. Secretary Raimondo and NAHB CEO Jerry Howard also discussed hosting a summit of building industry leaders, representatives from the lumber supply chain, and government officials in order to fully understand the problem from all perspectives.

Raimondo ended the meeting by thanking the NAHB senior officials for working with her and her staff.

“I want to thank the NAHB and its leaders for constructive engagement on this issue and working with us to find a path forward,” Raimondo said.

Commerce Secretary Promises to Act on Lumber Prices

(May 13th, 2021)— New U.S. Commerce Secretary Gina Raimondo told a House Appropriations subcommittee last week she and her office plan to prioritize reducing the historic and prohibitively high cost of lumber in the U.S. “I promise you I will,” she said.

High lumber prices were a frequent topic of conversation during the subcommittee meeting, which saw several lawmakers advocating for action.

As Rep. Ben Cline (R-Va.) noted, “The National Association of Home Builders says overall lumber prices have tripled and the increase translates into a nearly $36,000 increase in the price of the average single-family home.” He added the cost of oriented strand board (OSB) has jumped more than 250 percent since March 2020, rising from $8 a sheet to more than $60.

Raimondo acknowledged supply chain disruptions were causing major problems in homebuilding and many other industries. “I actually would love your guidance on what you think could be done,” she told Cline. “So right now we are trying to get under the covers of what’s going on, what are the root causes, and then what can we do at ITA [the International Trade Administration] to try to solve the problem, because I understand the problem and it affects the whole industry.”

Rep. Robert Aderholt (R-Al.) echoed support for action on lumber prices. “I understand there is plenty of lumber that’s being delivered, but the prices are continuing to go up and I think there is an issue with production,” he said. “If you [Raimondo] could make this a priority, it is really putting a lot of folks in a very difficult position for home building and various construction projects.”

Experts forecast lumber prices will remain high through the summer before dropping back as supply gradually catches up to demand. The easing of quarantine restrictions and the return of workers to sawmills and the trucking industry should gradually restore normal levels of lumber supply.

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