Builders continue to grapple with the fallout from the Coronavirus-related economic shutdowns. That fallout includes higher material prices and longer lead times.
As we all know, home starts crashed in March and April when states and localities temporarily halted construction and many homebuyers backed out of contracts. Demand for materials also tanked, causing plant closings throughout the building supply chain.
The good news is that housing bounced back quickly. August starts were up 22.6% over the previous month and 23.4% over the same period last year.
The bad news is that the supply chain's rebound has been more sluggish. Manufacturing operations, from logging outfits to panel plants, take more time to fire up than to shut down. With supply unable to satisfy demand, prices and lead times still far exceed what they would be in a normal market.
For builders, the biggest hikes have been in framing packages. Dimensional lumber costs twice what it did a year ago while OSB prices have risen 138 percent, according to the National Association of Home Builders. Lead times have also stretched out, with OSB orders taking a full five weeks to fulfill.
Commodity prices should fall over the next few months, but if demand remains strong, don't expect them to reach pre-COVID levels. And of course, future shutdowns aren't off the table. This uncertainty is making it tough for builders to plan their budgets with confidence, leading many to seek alternatives that offer more price stability and availability.
One proven way to reduce the framing budget is with an offsite system, which consists of pre-built framing components such as a wall, floor, and roof panels. Material costs are about the same as with site-built framing but, according to one leading panel provider, you can shave 11 framing days from a typical single-family home.
Large builders began embracing this option even before the spike in lumber prices. For instance, Pulte acquired a Jacksonville, Fla. panelization company in January as the first step to converting as much nationwide production as possible to components, according to Pulte CEO Ryan Marshall.
In addition, the Housing Innovation Alliance recently surveyed production builders in all U.S. markets and nearly all of them said they wanted to move in this direction. "The industry is seeing more use of advanced building methods, specifically when it comes to delivering offsite built components and expanding use of alternative materials," says Alliance President Dennis Steigerwalt.
Builders who continue frame the traditional way (as most will) can cut costs by switching from OSB to an alternative sheathing. For instance, gypsum panels have long been common in commercial construction and some energy-conscious home builders have used rigid foam. Racking strength is provided by diagonal frame bracing.
A third sheathing option is ThermoPly, a pressure-laminated panel made from high-strength cellulose fiber panels that have been treated to be water-resistant. Each panel includes an integral WRB barrier.
Brian McMullen of Ox Engineered Products, manufacturer of ThermoPly, says that the product has been installed on 5 million homes and is being used by every one of the top 10 national builders. He claims an average $1,400 savings on a typical 2,200-square-foot home. There have been no price increases or changes in lead time over the past five years.
Learn more about this proven, cost-saving manufactured sheathing.
