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Spike in lumber prices halts construction of new homes in East Texas

Local builders are hopeful they can wait a few weeks for prices to come down, because homes could cost as much as $40,000 more due to increased lumber costs.

FLINT, Texas — The home construction boom in East Texas is now at a standstill.

The cost of lumber has skyrocketed, so local builders believe doing nothing is the best course of action.

In the middle of June, lumber was selling for about $360 per thousand board feet. It shot past $900 last week before dropping back to $830. Anwar Khalifa of Pyramid Homes says this could shut down new construction for a few weeks at the least.

“I’m not paying it,” he said. “You know what I’m saying? I’ve just, I’ve stopped, basically, framing houses until to see what happens.

“It’s gonna lag for sheetrockers, it’s gonna lag for tape and bed guys, for trim guys, flooring guys, and painters, because work will be stopped for two or three weeks, and it’s not just me, it’s every builder I’ve talked to.”

Khalifa explained that the problem is in the middle of the supply chain. He says there is plenty of timber, but many lumber mills closed at the beginning of the pandemic.

“A lot of mills just closed down because it wasn’t worth it for them to process the materials,” he said. “Well, then, we’re in the middle of a building boom, believe it or not, so the demand started going back up, but all their employees were on this wonderful unemployment making $4,000-5,000 a month unemployment, so they didn’t want to go back to work.”

Khalifa says that rebuilding in communities affected by Hurricane Isaias and Hurricane Laura also increased demand for finished lumber.

“There’s not enough lumber mills and there’s plenty of timber out there, so the guys that are selling it are not making much money,” he said. “The mills are who’s making the money right now.”

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According to the National Association of Home Builders, builders in the United States get roughly one-third of their lumber from Canada, which is subject to U.S. tariffs of 20%.

Khalifa says he has two projects currently shelved because the increase in lumber costs would more than wipe away his profit margin.

“I’ve talked to another customer last night, who is a cash customer,” he said. “And I told them about lumber prices and where they’re at. And I said 'we’ll have to wait unless you want to pay the difference now'. And she goes, ‘no, we’ll wait.’ You know? So, it’s all, everybody’s not wanting to pay $20,000, $30,000, $40,000 more for a home.”

If the price of lumber stays this high, Khalifa believes business will slow down because he would have to pass the cost onto the homebuyer. “You know, they’re not going to like it and we’re not going to like it, but that’s going to be the new reality,” he said. “And you can imagine houses going up 10% just in one shot.”

Khalifa says he remains optimistic that the price has hit its apex, and that the market will react as it had to smaller spikes in the past by quickly retreating to normal levels.

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