Pueblo CO, Sep. 20--The rising cost of lumber is starting to squeeze profits for area home builders but they aren't ready to raise prices to home buyers yet, according to the Pueblo Chieftain.
Plywood prices have climbed close to 30 percent this year and oriented strand board (OSB), which has been a cheaper alternative, has doubled in price to where it costs almost as much as plywood, builders say.
A number of factors, from war to weather, have depressed supply and boosted demand. The Defense Logistics Agency has ordered $50 million worth of plywood that will be shipped to Iraq for the rebuilding of that country.
Fires in western Canada have cut into lumber production and a wet summer in the southeastern United States has made harvesting difficult.
There also has been a run on plywood along the whole East Coast as businesses and home owners prepared for the onslaught of Hurricane Isabel.
Kelly Kleven of Oakwood Construction said he uses OSB for nearly all siding, roofing and flooring purposes. The pressed-wood OSB has been cheaper than plywood because it can be made from smaller-diameter trees and is cheaper to produce. But as plywood prices have risen, more builders have switched to OSB, driving up demand and prices for that product.
Kleven said that his cost of OSB has doubled since the beginning of the year but he hasn't passed that on to buyers yet. He said that he may have to take another look at prices after the first of the year, however.
Cole Proctor of Domega Homes said the same thing, explaining that home prices factor in a cyclical lumber market. "We as a company try to absorb it because the wood market is like any other commodity: It goes up and down," he said. But if prices don't cycle back down, Proctor added, "You do eventually have to reflect it."
