A strike by the International Longshoremen’s Association ended on Friday, allaying concerns that an extended strike would have a negative impact on new home starts and sales.
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Members of the International Longshoremen’s Association returned to work Friday after successfully negotiating a 62 percent pay increase over the next six years. ILA members will keep their salary until Jan. 15, while union leaders continue to press for other demands, including banning the use of automated robots at ports.
“Today’s landmark agreement on minimum wages and an extension of the collective bargaining agreement represents significant progress toward a strong contract,” President Joe Biden said of the agreement Friday. “I congratulate the workers at the ILA docks, who deserve a firm contract after sacrificing so much to keep our ports open during the crisis. And I applaud the port managers and carriers who are members of the US Maritime Alliance for working hard and putting a strong promise on the table.”
The strike threatens to upend the U.S. economy, NPR reports, as dock workers process more than $2 billion worth of imported goods every day. During the two-day strike, shoppers panicked at stores like Sam’s Club and Costco. The latter has run out of toilet paper in many places, prompting the American Forest & Paper Association to call for calm.
“The American Forest & Paper Association is aware of reports of a toilet paper shortage, which some say is due to a strike at the port,” Heidi Brock, the group’s CEO, told CBS MoneyWatch on Thursday. “While we continue to urge the ILA and USMX to immediately end this strike in order to restore our members’ access to international markets for their products, we would like to emphasize that we do not know the expected impact on the supply of tissue products to the US”
Although the supply of popular foods and drinks – including seafood, bananas, chocolate, beer and wine – was at risk during the strike, many leaders of the housing market were afraid that the effects would spread to important construction materials and damage the momentum seen in the new strike-home market.
“We are closely monitoring the situation, as less than 10% of construction products are imported. However, a large portion of that is carried by rail, rather than through the port,” National Association of Home Builders Chief Economist Robert Dietz told Realtor.com ahead of the deal. “Nevertheless, a strike lasting more than two weeks would have a major impact on the economy and the construction industry.”
Dietz’s fears were based on what happened to lumber futures in the early years of the pandemic, when lumber futures peaked amid supply problems and former President Donald Trump’s tariffs against Canada. In 2021, an increase in sales of two-fourths, steel and gypsum (also known as drywall) took $35,872 off the value of a new single-family home.
Supply and labor problems have slowed new home sales by double digits in 2021 – a 360 from today’s market where new home sales have served as a bright spot in an otherwise lackluster market.
Although a foreclosure strike is no longer a threat, mortgage rates and affordability will continue to be an issue for new home buyers.
“First, buyers who have returned to the market will find that they have more options. Existing home inventory has been growing as more owners list their homes for sale, and lower prices will encourage more homeowners to list,” Bright MLS Chief Economist Lisa Sturtevant told Inman last week. “With more homes on the market, there may be demand less than new houses.”
“Secondly, historically, low mortgage rates tend to lead to price increases, but this year affordability is still a major constraint in the market,” he added. Therefore, although there may be more buyers in the market, home builders may find that the purchasing power of buyers has not increased.”
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