The high cost of building materials is pushing home prices skyward, across the country and here in Utah.
Local building suppliers are reporting sharp increases in everything from nails and plywood to rebar and copper piping.
Skip Hansen, a hardware buyer for Burton Lumber in Salt Lake City, said the contractor price of nails used in pneumatic nail guns has increased to $32 for a 5,000-count box today from $24 a box in January. Hansen said he has never seen the price reach that high.
"That's a pretty big increase considering nails haven't gone up for three or four years," Hansen said. "That would be the same as rebar. Rebar
had been very stable. Now it's gone way up, plus we are having a hard time getting it."
Twenty-foot length, half-inch-diameter rebar, a steel reinforcement used in footings and foundations, has jumped to $6.06, up from $4.75 at the first of this year.
"Right now the increases we're seeing mostly is with steel," said Kekai Grace, vice president of purchasing for South Jordan-based McArthur Homes. "It's high prices we haven't seen before. In the six years I've been here, we haven't had an increase in rebar, and within the last six months we've had big jumps."
Yet the most significant price hikes, Hansen said, are occurring in plywood and wafer board, used in sub-flooring, walls and roofs. A four-by-eight sheet of seven-sixteenths-inch wafer board is selling at $19 a sheet, up 217 percent from $6 a sheet a year ago.
"Virtually all structures have some of it in it," Hansen said. "We've been seeing increases for a year in those."
Katie Baxter, purchasing agent with Sandy-based Standard Plumbing Supply Co., said the contractor price of Romex copper wire used in heating systems has increased dramatically, too. Today, a 250-foot roll of Romex wire sells for $49, up from $40 a roll six months ago, an increase of 23 percent.
Copper piping, used for water lines in homes, has "gone through the roof since December," Baxter said. "I'm seeing pricing increase notices on copper piping at least every three weeks."
The most popular seller, 20-foot length, half-inch diameter copper pipe, is going for $11.80, up 51 percent from $7.80 in December.
"The pricing has gone totally out of control," Baxter said. "Contractors are not happy. Our costs are going up, so we have to raise it to contractors, which makes them unhappy because they have already quoted-out to people they are building for."
All of those increases add up to higher home prices for consumers.
McArthur Homes, a Salt Lake County homebuilder, has raised the base price of its homes about $3,000 to $5,000, a 2 percent to 3 percent increase over the past six months.
Salt Lake-based Hamlet Homes has had to raise its home prices 3 percent to 7 percent. The average price of its homes is roughly $160,000.
"That's simply covering the cost of what suppliers pass on to us as the builder," said John Aldous, president of Hamlet Homes. "Lumber makes up 12 to 15 percent of the cost of a home, and lumber has gone up double and triple."
Aldous said consumers have taken notice of the price increases.
"They're hearing that China is draining our resources because China's economy is clipping along at 8 or 9 percent," Aldous said. "With interest rates as low as they are it's more easily absorbed, so they are not complaining terribly."
But Aldous predicts little relief in future prices.
"If anything when this levels out it's just going to go up, because there's other costs that are coming into play," Aldous said. "If history is any indication of what's going to happen in the future, prices are going to continue to escalate."
Eric Allen, director of Metrostudy, a Houston-based real estate consulting firm with offices in Utah, said the 2004 first-quarter median price of newly constructed homes in a seven-county area making up the Wasatch Front, and including Summit, Wasatch and Tooele counties, was $205,000.
About five percent of that price, or $10,250, Allen said, can be attributed to an increase in building materials. But Allen said the biggest driver behind increasing home prices is demand for housing combined with low interest rates.
"The worst part about some of these price increases is that they're projecting them to continue through the end of the year," said Ron McArthur, co-owner of McArthur Homes. "Usually you see lumber prices soften and go down a little bit in the winter, and then it heads up in the spring and it's high in the summer.
"What concerns us about the lumber increase is it came in the fall and winter. Are they going to take the same percentage increase in summer? The problem is when we're looking at these kinds of increases I can't ride this out. I have to raise prices. I can't just wait."
James Wood, director of the University of Utah's Bureau of Economic and Business Research, said much of the current price pressure is tied to supply and demand.
In 2003, the total value of residential construction in Utah climbed 22.3 percent to $3 billion. A total of 16,515 new single-family homes received permits during 2003, second only to the total posted in 1978, when 17,424 permits were issued.
Demand does not seem to be slowing. In the first quarter of this year, the valuation of new residential construction was up 9 percent compared to the same period of 2003.
Those waiting for material prices to fall before building a home may be in for a long wait.
"Don't wait too long," Hansen said, "because I don't think you'll ever see prices down again on this stuff."
E-mail: danderton@desnews.com