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Writer's pictureDon Magruder

Housing Crisis Not Easily Resolved


I am asked daily, “when will building material prices come down and the housing market get back to normal?” My answer is not well received, but I try to be straightforward when I say, “I don’t see how the housing and supply issues resolve quickly because housing demand is overwhelming a broken supply chain that does not have the capacity, and the last few years of America pulling back on global trade deals are starting to create real supply problems.”


Here is the reason why I believe this:

  • Windows have a 16–32week order lead time and most other building material components are very extended in lead times or unavailable.

  • Steel is in short supply and continuing to rise in price, as well as concrete.

  • According to West Fraser, a major North American lumber producer the American market is sized for 1.5 million housing starts. The country probably needs to be around 2.0 million. The lumber shortage is real.

  • Immigration policy and an aging workforce has created significant shortages in construction labor that appears to be long-term.

  • The pandemic and aging millennials are creating an environment of unprecedented demand since the 2005-2006 housing boom. The difference, this is not bank and investor driven, this housing boom is caused by real demand that is not easing. The lines of people trying to buy a home are real and many are motivated by the pandemic and unrest in the large cities. Suddenly, owning a home is a big deal for younger families and cash buyers with money are flooding the markets.

For example, if North America is 500,000 housing starts short in demand, West Fraser estimates you will need 10 sawmills for every 100,000 additional housing starts. It would be almost impossible to build and ramp up production quickly in 50 sawmills due to the shortage of equipment, steel, people, and logs. There is no easy fix to the lumber issue and no, it is not caused by any President. The housing bust of the 2000’s closed a huge amount of production that has not been used in 12 years, you simply cannot flip a switch and bring it back online.


Per the United States Census Department, housing starts in America for the month of April were 1,569,000, and new building permits issued in April were 1,760,000. Both numbers are above the 1.5 million housing starts that West Fraser says the country has supply capacity available. New home sales were up 48.3 percent from the prior year to 863,000 units, and the number of new homes for sale on the market were 316,000 or 4.4 months, which is woefully low. The average home price was a whopping $435,400.


Housing sales in Florida were up 55.4 percent per the Florida Realtors. Home prices rose 22.4 percent from the prior year with the statewide median price settling at $336,525. In April, Florida only had a 1.1-month supply of single-family homes on the market which is horribly low. As the COVID-19 rates continue to improve and the country gets closer to normal, expect these housing numbers to improve dramatically. There is a lot of pent-up demand in housing that is about to be unleashed.


Forecasts and predictions can be wrong, but the chatter on social media that says lumber, building material, and housing prices will drop later this year are simply unfounded. As I stated earlier, “I don’t how this resolves quickly.”

Don Magruder is the CEO of Ro-Mac Lumber & Supply, Inc., and he is also the host of the “Around the House” Show which can be seen at AroundtheHouse.TV.

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