Construction Costs Pile Up as Copper, Lumber Spike

Rising mortgage rates aren’t the only thing freezing the housing market. Builders are contending with a fresh wave of sticker shock on the job site, as soaring prices for copper, lumber, diesel and aluminum drive up the cost of putting homes in the ground.

A mix of geopolitical turmoil, tariffs and supply-chain disruptions is rippling through construction materials markets at a moment when affordability is already stretched thin, the Wall Street Journal reported. The result is higher costs for developers, more uncertainty for homebuilders and even fewer paths to affordable homeownership.

Copper has become one of the industry’s biggest headaches. The average American house contains more than 400 pounds of the metal across electrical wiring, plumbing and appliances, and prices recently hit record highs.

Demand from data centers and electric vehicles has collided with supply problems at Freeport-McMoRan’s massive Grasberg mine in Indonesia, where production setbacks after a deadly mudslide continue to constrain output.

Fuel costs are adding another layer of pain. The war involving Iran has disrupted global oil and petrochemical supplies, pushing diesel prices roughly 50 percent higher since late February.

That’s feeding directly into freight and manufacturing expenses for basic construction staples including wallboard, cement, plastics and resins. Eagle Materials recently said rising fuel costs added more than $2 per thousand square feet to wallboard shipping expenses during the fourth quarter.

Lumber prices are climbing again, too. Canadian sawmill closures and tariffs tied to the long-running U.S.-Canada softwood dispute have tightened supply heading into peak building season. Duties and Trump-era tariffs together have pushed import taxes on some Canadian lumber producers to roughly 45 percent. Random Lengths’ framing lumber composite index has jumped more than 30 percent since December lows.

Builders are already signaling concern. The National Association of Home Builders said 70 percent of respondents in its April confidence survey reported difficulty pricing homes because of volatility in material costs. PulteGroup executives warned investors that higher wood and metal costs are likely to hit home prices later this year, even as the company resists supplier fuel surcharges.

The broader concern for developers is that construction inflation could become self-reinforcing. Higher material costs feed broader inflation fears, which in turn keep borrowing costs elevated. Freddie Mac last week pegged the average 30-year fixed mortgage rate at 6.51 percent, its highest level since August.

— Holden Walter-Warner