Words from Mid-Cape Home Centers’ Purchasing Manager, Will DeMaida
Update from February 15, 2021 – more updates to come.
All signs are pointing to a very busy spring. The U.S. Census Bureau and U.S. Department of Housing and Urban Development announced that Housing Starts hit a rate of 1.67M at the end of 2020 – meaning there would be 1.67M housing units that would begin development over the next 12 months if the current rate of new Starts continued for a year. For comparison, we’ve been hovering around 1.2-1.3M Starts/year for the past 2-3 years, so there is ample demand out there. Amazingly, this demand has persevered through the pandemic, unemployment, and an administration change. It certainly feels like the real deal.
The problem is that manufacturers can’t keep up with this demand, so the limited supply is fetching record-setting prices in almost all commodity building products. This isn’t to say that manufacturers aren’t trying to adjust to these new market conditions – in many cases they’re running up against several challenges (some new, some old):
- Labor – between workers opting for unemployment at the beginning of the pandemic to the labor pool shrinking due to active COVID cases now, there just doesn’t seem to be enough labor to go around. This is impacting the entire supply chain – manufacturers are having trouble finding and keeping skilled labor due to COVID, and distribution companies are encountering the same with drivers
- Nature – winter is setting in and we’re seeing delays across the board from rail to trucking due to weather – add this to the fact that the west coast forest fires from mid-2020 are now impacting supply (as well as bugs from earlier in 2020) and there’s a lot less wood to go around, and a reduced ability to move it
- Lack of relief – typically the late fall and early winter months would be when most manufacturers wind down their production, evaluate the landscape, and plan out the following years’ production needs – demand never slowed down at the close of 2020, so many are still playing catch up and never had time to properly reset and evaluate
There was concern that as prices skyrocketed there would be hesitation from consumers to start new projects, but this doesn’t seem to be the case… yet. However, prices on some products are reaching levels of 2-3x what they have been historically around this time, so one has to wonder how much more the market can bear?
We base all of our pricing on the market activity, so when prices fall for the traders, they’ll fall for us and most importantly, YOU. It’s safe to say that we can count on irregular trading prices as long as demand continues to outpace supply. We don’t have a crystal ball, but some suppliers are anticipating these product issues to continue well into 2021. There’s hope that relief is coming by summer, as a vaccine would have significant impact, but it’s another question in a long list of unknowns. If we can offer you any peace of mind, know that we do everything we can to minimize price increases for you.
With all that said – there might be some extended lead times for certain products, and it may take some time for the prices to come back down, but Mid-Cape commits to doing whatever we can to keep product on the ground for you. Thanks for your patience as we work through this together!