T. Scott Ashcraft, president and CEO at Las Ventanas NM, Inc., has seen the home-building industry go through numerous ups and downs during a career that has lasted more than a quarter of a century.
The most recent and troubling trend was a massive increase in the cost of lumber. For more than a year, lumber prices rose to levels unseen by veteran builders.
The COVID-19 pandemic was at the root of the increase, as sawmills were forced to spread workers farther apart, and shut down for deep cleaning. They also reported difficulty filling positions.
T. Scott Ashcraft
| Las Ventanas NM Inc.
All these dramatic changes led to lumber prices hitting tree-top levels. But this summer, that started to change. Fortune reported lumber prices dropped for three straight months.
“Since peaking at $1,515, an all-time high, on May 28, the cash market lumber price is down a staggering 74%,” Fortune reported in August. “Not only has the bursting lumber bubble erased all of its 2021 gains, but it has also sent prices all the way back to 2018 levels. Prior to the pandemic, the price usually ranged from $350 to $500. We're now at the lower end of that spectrum.”
Ashcraft said it was a welcome change, but he said that doesn’t mean home prices will tumble as well.
“Thankfully we are finally seeing the reduction in wholesale lumber prices reflected in what we pay at the lumber yard,” he said. “I do believe this reduction will lead to the resumption of some (larger) projects that were put on hold while prices were overly inflated. That being said, prices for several other building materials have risen so I do not expect to see a large decrease in the overall cost to build a home.”
A major reason for that is the sharp increase in costs for other housing materials. The National Association of Home Builders reported on 10 items whose price has risen at least 30% in 2021.
They included steel mill products, building paper and building board mill products, asphalt, plastic water pipe, fertilizer materials, laminated veneer lumber, thermoplastic resins and plastics materials, structural metal joists and concrete reinforcing bars, wood window and door frames and copper pipe and tube.
“Over the first seven months of 2021, the majority of these products’ prices have increased many times more than they did in 2020,” the NAHB reported. “The price change of steel mill products is the most glaring example, up 81.3% year to date following a 2020 increase of 11.1%.”
Las Ventanas builds about 20 custom homes per year, and Ashcraft personally oversees all levels of construction. He said the cost rose as lumber prices skyrocketed, but because of the demand for homes, most projects continued.
“The price of those homes has increased from $20,000 to $60,000 over the last 12-14 months due to the rising cost of lumber,” Ashcraft said. “Thankfully, none of our clients elected not to build due to the cost increase but several did put their projects on hold waiting for a decrease in pricing. Each of the projects that had temporarily been place on hold are now under construction.”
Ashcraft is a past president of the New Mexico Home Builders Association. He is the fourth generation of custom home builders in his family, and has been operating Las Ventanas NM Inc. since shortly after obtaining his general contractor’s license in 1995.