Builders Add Escalation Clauses to Offset Lumber Prices o help protect themselves T from ongoing price increases in the lumber market, more
their sales contracts,” according to the most recent National Association of Home Builders
clauses are similar to price escalation clauses in that they tie the final house price to
builders are adding escalation clauses to their sales or construction contracts. The rising and volatile costs of lumber continue to hamper the new-home and remodeling markets. Lumber prices nearly doubled over a four-month period in 2020 and have continued to reach new highs. The price and availability of building materials have been cited as one of the top challenges that homebuilders face at a time when the real estate industry is calling for more housing inventory to meet surging buyer demand.
association’s Eye on Housing blog. “The difference is that, in the typical shared price clause, the home builder agrees to absorb part of the material price increase, with the home buyer covering the rest,” he writes. While these price escalation clauses may help to protect builders from rising costs, customers unable to afford the escalated house prices will result in lost sales, Emrath said. Builder actions to deal with rising lumber prices
and Wells Fargo Housing Market Index survey. Also, 10% are including shared price clauses in their contracts. Shared price
Forty-seven percent of builders said they were “including price escalation clauses in
the price of building materials, Paul Emrath, NAHB’s vice president for survey and housing policy research, said on the
More builders are pre-ordering lumber to help avoid cost increases, and 22% are obtaining price guarantees from suppliers. But those price guarantees don’t often stretch past two months.
Courtesy of National Association of REALTORS® website
LIZ OWENS
Branch Manager
NMLS: #634638 | ID MLO-21138 MT 634638 | WA MLO-634638 c: 208-503-7196 e: Liz.Owens@OnQFinancial.com w: OnQFinancial.com/Liz-Owens 618 D Street, Suite A Lewiston, ID 83501
SPRING INTO A NEW HOME!
Liz Owens and On Q Financial can help to find the best possible loan option for you! • • • • • •
Purchase Refinance FHA, VA, and USDA Down Payment Assistance One-Time Close Renovation Loan approval is subject to applicant’s qualification for a loan program. On Q Financial does not guarantee that each applicant will receive a loan.
OnQFinancial.com | © On Q Financial, Inc. | NMLS 5645 | ID MBL-6579 | MT 5645 | WA CL-5645 022221-A_OnQ_MC-AD--Liz-Owens.indd May/June2021
2
LEWIS CLARK VALLEY HOMES
2/24/2021 3:41:00 PM
