Hikes in costs of materials hitting like a ton of bricks

First the run-up in gasoline and milk prices. Now lumber and steel.

Homeowners planning to add a second story or a deck or, heaven forbid, build a new house are in for some serious sticker shock, experts say, as soaring prices of construction materials -- from plywood to plumbing products -- force contractors to raise prices along with the roofs.

Record demand for construction supplies amid shortages is creating a pricing nightmare, just as home building approaches peak season.

The price of framing lumber is up 58% from a year ago. Oriented strand board -- the plywood substitute used for walls, floors and roofs -- costs 158% more than a year ago, according to Random Lengths, a market- and price-reporting service that tracks lumber prices.

Steel scrap prices are up 100% from last year, making steel studs, reinforcing bar, nails and other products more expensive, according to the National Assn. of Home Builders.

In California, the steep price increases could add about $8,000 to the cost of building a 2,100-square-foot house, said Michael Carliner, economist for the builders’ trade group.

Some “weekend warriors” -- homeowners who do their own home improvements -- may put off some projects, such as deck-building. Retail prices for premium redwood, for example, are up 23% from a year ago -- $2.57 per board foot, compared with $2.10 per board foot, lumber vendors report.

Contractors, especially those who remodel homes, are feeling the pinch.

“I’ve never seen anything like this,” said Jeff Birch, a Dana Point builder in business for 27 years. “I looked at plywood two to three months ago and it was $10 a sheet; now it’s $20.”

Big lumberyard companies, such as Stock Building Supply (formerly Terry Lumber Co.), are used to fluctuations in wood products, but this time is different, they say. The price run-ups have been lightning swift, resulting in comparison shopping among contractors, who typically stick to one supplier.

“I look at this market and cringe,” said Stock Building Supply salesman David Johnson, whose clientele is about 90% contractors. “We’re pushing too much lumber here to have to re-quote deals after contractors compare prices” at discount stores.

Additionally, copper and stainless-steel prices, as well as drywall, have shown steady gains this year. Because of China’s building boom -- it uses more than one-third of the world’s supply of steel and cement -- steel prices have gone up significantly and cement shortages have been reported.

Some smaller contractors, to protect their bottom lines between contract signings and the beginning of construction -- often three months -- routinely include a 5% cushion in the contracts, and others are adding “escalation clauses” to allow for sudden increases in costs, especially of lumber.

Dana Point contractor Birch paid a steep price two weeks ago for not using such a clause. He agreed to a remodeling quote he gave a customer, who was slow to sign his contract. By the time Birch locked in the lumber prices with his supplier, after the contract was signed, the prices had gone up $6,000. Birch, who didn’t want to renege on his original bid, had to absorb the expense.

“Now we put in a warning that the price of lumber in the contract is good for seven to 10 days only,” Birch said. If the customer doesn’t sign the contract within that period, Birch is free to renegotiate the price.

La Canada Flintridge contractor Bob Rhody, reacting to the high cost of raw building materials, raised his price $2 a square foot to $91 per square foot in January, when prices started climbing, and will raise them again this month for new contracts, allowing him a small cushion against price increases. A decade ago he charged $60 a square foot.

“We don’t usually need a cushion, but costs have gone up 50% in the last 10 years or so,” Rhody said.

More dramatic, he added, is that in 1978 he could build an entire house for $3,500 worth of lumber. Today, a second-story addition alone requires $10,000 in lumber.

Some Southern California buyers may have a problem getting accurate appraisals on newly built homes. Lags in updated sales prices reflecting higher building costs could shut out some buyers.

Contractors worry that if interest rates continue to rise as expected, customers will seek more bids than usual, resulting in builders having to get more quotes for building materials to stay competitive.