Material shortages, high prices impact home construction


TRI-CITIES, Tenn. (WJHL) — The home development industry is facing a backlog. With high demand for new houses, there is simply not enough supply to keep up. Construction materials to build new homes to meet the growing demand are becoming harder to find and prices for materials are skyrocketing.

Material shortages are being seen nationwide, including here in the Tri-Cities.

“It’s almost comical. Every week it seems like it’s hard to get something,” said builder Kelly Wolfe, owner of Wolfe Development in Jonesborough, Tenn.

Monty Puckett is general manager of Builders First Source in Johnson City, a construction material supplier. He is seeing those shortages first-hand as he struggles to supply his customers.

“This is historic. We have never seen anything like this before,” said Puckett.

From builders to suppliers to manufacturers – the shortages of construction materials coupled with extremely high demand for homes are impacting the entire supply chain.

“When you can’t get enough, naturally the price starts going up,” said Puckett.

In fact, prices for materials are skyrocketing across the board, the nature of low supply and high demand.

“Items we have had no issue getting over the last 30 years, now we are not sure when the next arrival will be,” said Puckett.

With higher costs to build, home prices are rising for buyers.

The Northeast Tennessee Association of Realtors estimates that the prices of home sales have grown in our region. In May of 2019 the average sales price was sitting at $176,000. For May 2020, it was $182,000. For May 2021, it jumped to $233,000.

In addition, May 2021 saw more than one thousand new local listings compared to last year.

A shortage in materials makes it harder for those building the homes to keep up with the speed of the market.

“What we have seen is quite honestly a flood of people from out of state. I would say 90 percent of what we sell right now is from out of state buyers,” said Wolfe.

The COVID-19 pandemic of 2020 froze the market, now the pent up demand has fueled an unexpected boom.

“The housing market is great, but it’s not the reason we are having these shortages. These shortages come from planning and guessing previously about what the demand would be and missing the mark,” said Wolfe.

Puckett adds this perfect storm has been brewing for a while and was exacerbated by the pandemic.

“We have been hearing for the last three or four years that the inventory of houses would get to a point where there are people wanting to buy more than there is to sell. We are there,” said Puckett.

As demand for new homes continues to grow, shortages in labor are also impacting the market.

“You’ve got everybody that is good at what they do very, very busy,” said Wolfe.

For suppliers, the last eight to ten months have looked like planning ahead, buying ahead, and hoping they can keep the shelves stocked.

“We’ve never had to plan so hard to take care of our customers,” said Puckett.

Both Wolfe and Puckett estimate it will take another six to twelve months for the market to return to a sustainable level.

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