BETTENDORF, Iowa — As the housing market heats up and prices rise across the country, it's also getting more expensive to build a new home.
One of the key materials needed for home construction is lumber, and the price of that good is up 250 percent. The National Home Builders Association estimates that the price is build a new single-family home is up $36,000.
Jim O'Neal, President of O'Neal Contracting, says after 20 years in the business, he's never seen anything like this.
"Lumber is on a run, and it's been on a run for an extended period of time and it hasn't stopped," he says.
When the world shutdown because of the COVID-19 pandemic last year, so did lumber mills. Then in the summer, the housing market started to bounce back.
"It caught everyone off guard, especially those manufacturing the product goods needed for home construction," O'Neal says.
Now the demand for houses and the raw materials needed to build them is higher than the current supply. O'Neal says increased costs for lumber means higher home values.
"I generally tell people that the $400,000 home is now the $450,000 home, the $500,000 home is now the $570,000 home, the $600,000 home is the $700,000 home," O'Neal says.
The local market is currently keeping up, and O'Neal says that low mortgage and interest rates are helping the situation. But, he says he's worried that prices will get too high.
"I think just think it comes down to lack of affordability, the challenge becomes at what point does it get to a point where the next person cant buy the house," he says.
Even as prices rise, his contracting company is as busy as ever as they are operating at max production through the fall.
O'Neal says that the cost of materials, like steel and wood, is rising too. He says that combined with the lumber issue makes for a challenging planning process in home buying and construction.