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Building Material Shortage Could Dampen Housing Recovery

June 28, 2013

According to recent surveys by the National Association of Home Builders (NAHB) and the National Lumber and Building Material Dealers Association, home builders and lumber dealers are experiencing significant shortages in building materials, a supply constraint that threatens to hamper gains in the housing market recovery.

While this report comes amid promising May figures for existing-home sales, the National Association of Realtors cautioned that new home construction rates will not satisfy the growing demand for sales for very long.

Lumber dealers were hit by supply shortages the hardest, with 36 percent reporting shortages of framing lumber, 27-28 percent reporting shortages of oriented strand board and plywood and 12 percent lacking wall board.

"Supply constraints are one of the barriers to a more robust recovery," said David Crowe, NAHB chief economist. "The shortages and price increases reported by both home builders and lumber dealers are particularly concerning given that the current rate of construction is still far below what would be considered normal or necessary to meet underlying demand."

According to Crowe, the shortages are not as high as they were in 2004 or 2005, but the numbers last month were considerably higher than they were in 2012 or 2011.
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