When Russia invaded Ukraine last week, commodity markets immediately began seeing volatility which will have builders, developers and offsite factories once again looking for answers that unfortunately aren’t there yet.
While the war will affect us in the US, the people of Ukraine are facing a battle hopefully none of us here will ever have to face. Please watch the video at the end of this post to learn how you can help their efforts.
Will the conflict in Ukraine lead to higher home prices for US home builders?
Some key commodities for new home construction, such as lumber, have reached record-high price levels, and experts predict home prices to rise by as much as 22% this spring.
Higher material costs coupled with higher mortgage rates, which are likely looming in the next few weeks, will hamper housing affordability, economists say.
In the past 3 days, gasoline prices at my local station have jumped 60 cents with many stations charging $4.20 a gallon for regular and almost $5.00 for diesel. Look for transportation costs to begin climbing drastically, especially for materials being shipped into offsite and modular factories and then again when the finished product is shipped to the job site.
Oil prices shot past $120, and if the West decouples from Russian energy the way it has from other businesses, that could well shoot higher.
Russia is a major producer of aluminum and copper, materials that have already seen huge price increases and now that the US is reluctant to buy those metals, prices could balloon even higher.
Potential homebuyers in all price ranges may become more hesitant to make large purchases amid stock market uncertainty and fears of how a potential full-blown war in Europe might affect U.S. inflation—which is already at a 40-year high.
Escalating inflation is hurting renters, buyers, and homebuilders who are facing rising construction costs and a potentially slowing demand for new homes.
A Modcoach Shoutout to Dave and Jennifer Cooper for their efforts in raising money for the Ukraine people in their fight
Gary Fleisher is Editor in Chief of Modular Home Source and the Offsite Builder. Email at [email protected]
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