(The Center Square) – A dearth of homes for sale in Illinois has sparked a modest building boom.
New construction has seen a lull the last few years, but has picked up during the pandemic in part because of a lack of available inventory.
Ed Neaves, president of the Illinois Realtor’s Association, said people stuck in their homes for weeks have realized they can build what they want.
“It is because of the interest rates, the pent up demand, people are putting that extra room on for homeschooling or an extra closet, or they are moving out of town to a suburban area,” Neaves said.
Neaves said the Bloomington company he supervises, Tentac, may have built half a dozen homes over the last several years, but this year is different.
“So far this year, we have 26 closed, we have another 7 pending, and we have another 12 or 15 going into the ground or at some kind of stage,” Neaves said. “We could wind up with 50 to 60 homes built and sold this year, which is more than the last 7 years combined.”
As a result, there are lumber shortages around Illinois and the rest of the country. Lumber mills closed at the beginning of the coronavirus pandemic, so inventories at lumber yards were low throughout the summer. Mike Watson at Pawnee Lumber and Hardware says they are trying to keep pace with demand.
“We are keeping up with it as much as possible,” Watson said. “There are a few holes but for the most part we are keeping up with it. It’s kind of tough though.”
High demand and low supplies lead to higher prices. Neaves said prices for treated lumber in some areas have shot up over 300 percent. He said the cost of one of their new constructions increased $30,000 as a result of the skyrocketing prices for building materials.
The National Association of Home Builders said builder confidence in the market for newly-built single-family homes increased five points to hit an all-time high of 83 in September, according to the latest NAHB/Wells Fargo Housing Market Index released this week. The previous record in the 35 years of the series was 78, which was set last month and also matched in December 1998.
“Historic traffic numbers have builders seeing positive market conditions, but many in the industry are worried about rising costs and delays for building materials, especially lumber,” NAHB Chairman Chuck Fowke said. “More domestic lumber production or tariff relief is needed to avoid a slowdown in the market in the coming months.”
NAHB Chief Economist Robert Dietz said lumber prices have increased across the country.
“Lumber prices are now up more than 170 percent since mid-April, adding more than $16,000 to the price of a typical new single-family home,” he said. “That said, the suburban shift for home building is keeping builders busy, supported on the demand side by low interest rates. In another sign of this growing trend, builders in other parts of the country have reported receiving calls from customers in high-density markets asking about relocating.”