"I'm pretty much telling people that if I spent $500,000 for materials for a house last year, that same house is going to cost $600,000 this year," Gibson said. "What used to cost me $200 per square foot to build will now cost $220 to $240 a square foot -- for the same house."
Because some contractors didn't anticipate or couldn't pass through price hikes to existing customers, they say future customers will feel their pain.
China's Expansion Squeezes Cement Supply
China's demand for cement comes up often in discussions with home builders about rising materials costs.
With the world's fourth-largest economy in the midst of an unprecedented expansion, there's not much left over for others, say the analysts.
China is taking about 40 percent of the world's cement production and about a third of its steel, according to the National Association of Home Builders. And, perhaps more important, its demand for cement and other products is affecting the shipping fleet that used to carry materials here.
"The ships that were being used to transport cement here are being diverted to the Orient, to China," NAHB chief executive Jerry Howard said. "It's more attractive financially for them to make a run from Southeast Asia . . . and from Greece [two big cement-exporting nations] to China than to ship to the United States."
America imports about 20 percent of the cement used here, but Florida, the hottest building market in the nation, imports about 40 percent of its supplies. Florida's demand for cement is high because building codes require concrete framing materials to protect against hurricane damage.
Before this year's hurricanes, the NAHB said its survey of builders showed 41 percent of respondents citing cement shortages, a huge jump from May, when 11 percent of those polled reported problems, and from March, when only 3 percent of builders noted difficulties.
The Portland Cement Association, a trade group representing U.S. and Canadian companies, last month said that 29 states were experiencing shortages.
Cement industry experts say the recent hurricanes could ease the cement problem temporarily because Florida builders can't work, at least for a little while. But they anticipate that reconstruction and the resumption of new building will quickly push demand back up.
"Locally, we will probably feel the impact of the hurricanes when the Florida reconstruction process gets into full swing. . . . There will be significantly more demand [for cement] then," Howard said.
"It's the worst time for it to happen because every region and every market sector is in the height of their building cycle," he said.
Cement manufacturers say the mild winter this year exacerbated their problems. Because builders kept building in the winter, cement plants didn't have time to build inventories as they usually do.
"It's almost impossible to get concrete," Potomac builder and remodeler John L. duFief said. "Where it used to take two days or a day to get an order in, it takes five days."
Because of the backlog for orders and problems getting cement shipments across country by rail, building contractors say they're stretching their projected construction schedules.
Cement producers don't see much hope for prices to drop or supplies to grow soon.
Dennis Skidmore, senior vice president of the St. Lawrence Cement Group, which has a large facility in Hagerstown, predicts the shortage will "worsen significantly this month and next because it's the peak construction season, but all of us have zero inventory."
Skidmore added that he anticipates similar conditions in the marketplace in 2005.
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Materials costs are "killing me," said Earl Tyson, owner of Maryland Carpenter Services Inc., a design/build company in Bethesda.
"For an example," Tyson said, "I signed a contract for a customer in Bethesda . . . five months ago and I have not yet purchased the material. I was about ready to, and then there was another hurricane coming" that made his suppliers warn that materials still wouldn't be available.
Tyson bemoans not only the rising prices of materials but also sharp increases in the price of oil. That's affecting what he is charged by subcontractors for "everything from the cost of . . . bringing materials to a job site to trash hauling" away from the site.
"The contractors have absorbed this financial obligation for the last six to eight months, but guess what?" warns Tyson. "When the new projects are coming up, the contractor is going to pass this cost along. . . . That's the kicker."
While rising materials prices and supply problems were not a showstopper for most Washington area builders and renovators before the hurricanes, Frances did temporarily shut down some operations here.
At the beginning of last week, for example, Wheaton Tile Center owner Richard Scherer said he couldn't find plywood for three scheduled projects "because they were shipping it all to Florida."
Scherer did finally track down some supplies, after calling three Home Depots. But he said, "The rising cost of plywood is probably more of an issue. . . . The contractors we talk to have all voiced a concern, but I don't think the customer has realized yet what it will mean."
Tom Bozzuto, president and chief executive of Greenbelt-based builder Bozzuto Group, said his materials costs "have probably gone up somewhere between 10 and 15 percent" in the last year.
"The increase in the price of lumber, in particular, has been dramatic," Bozzuto said. Lumber nationwide more than doubled in price for many uses this spring, then dipped a bit. Then it started to climb again. Lumber prices are traditionally erratic, but the unpredictable jumps during recent periods of high demand have particularly hurt, say industry analysts, and some types are steadily marching upward.
Plywood prices nationwide jumped about 22 percent from August 2003 to August 2004, according to the Bureau of Labor Statistics.
The price of oriented strand board (OSB), a compressed wood used in place of plywood for sheathing and flooring, has doubled in the past year, according to the labor statistics bureau. The peak price this year was more than $16 per four-foot-by-five-foot sheet in April, compared with about $6 the previous spring. OSB is now selling for about $12 a sheet .
"With about 300 sheets per new home, the increase from early 2003 represents about $1,800," said Carliner.
