NEWS RELEASE - July 23, 2004
Building Costs are UP across the board!
The National Association of Home Builders (NAHB) reports that prices for softwoods used most often in building have climbed 58 percent in the last year. Plywood prices are up by 100 percent, and OSB (structural engineered wood panels) by 158 percent. “We first saw what was happening last fall, when plywood prices doubled in some cases,” says Fausto Martin, Safeco National Director of Property Claims. Because plywood or OSB is used everywhere from roof sheeting to
sub-floors, even a small price increase can affect overall building costs. Steel costs more today as well. USA Today reported steel prices have risen 40 to 60 percent in recent months, while Bloomberg News reported the cost of imported iron and steel had increased by 35.8 percent from last year. NAHB statistics show the price of scrap steel is up 100 percent from last year, affecting everything from steel studs to rebar to nails.
Copper prices have gone up 22 percent since November, according to MSNBC. Prices for cement and concrete have risen and are expected to spike significantly. Rising fuel prices are accompanied by price hikes for other petroleum-based products such as plastic piping, drywall and insulation. Even labor costs have gone up. U.S. Labor Department figures show the hourly earnings of construction workers averaged $19.19 in March, up 2 percent from a year ago.
These rapid increases are hard on business owners in many ways. But protecting policyholders from inflation and making sure they will have adequate building limits is one of Safeco’s top priorities.
Demand just one cause
Unusually heavy demand for building materials over the past year has resulted in the shortages that are driving prices up. But demand is just part of the story. A number of different causes are cited for the scarce inventories of wood, steel, copper and other building supplies: