The price of a new home in Lawrence is expected to increase by about $5,000 as a national shortage of plywood takes its toll.

And the prices may keep growing as a hurricane bears down on the East Coast and the U.S. military continues the rebuilding process in Iraq.

“It is as bad as it has ever been,” said Dave Garrison, manager of Builder Resource, a Lawrence lumberyard that sells to contractors. “Some of them have about passed out when they’ve seen the bill.”

Garrison said a Lawrence builder could buy a 4-by-8 piece of plywood for about $7 this past spring. Today, it costs about $20.

That’s bad news for builders and ultimately home buyers because plywood typically is used on the roof, floors and side walls of houses.

Nationally, industry observers have said the higher prices could add about $2,000 to the price of an average home. But several area lumber retailers said that number seemed too low.

“It would definitely add at least that much,” Kevin Sowards, manager of Schmidt Builders Supply, said. “I would say it would be a lot closer to $5,000.”

Opinions are mixed on why prices have spiked. A leading theory has been that the U.S. military’s purchase of $50 million worth of plywood to use for a variety of purposes, such as flooring for tents in Iraq, depleted the national supply.

Sowards said that was part of the reason but said a larger factor likely was a hot housing market that had been fueled by low interest rates for the past several years.

Mike Morgison, Oskaloosa, loads plywood onto a forklift at Schmidt Builders Supply, 1861 E. 1450 Road. The cost of plywood has tripled in recent weeks due to a shortfall in lumber. Area lumber retailers Wednesday attributed the shortfall to an increased number of new homes, the rebuilding process in Iraq and forest fires in Canada. Morgison moved the plywood Wednesday.

“Building permits across the country are up more than they have been for years,” Sowards said. “It’s all that increased demand that has really done it.”

Other factors have included forest fires in parts of logging areas in Canada, and an extremely wet season in parts of the Northeast that have made it difficult to harvest logs.

Builders said they were worried the prices were near a point that planned construction would have to be postponed.

“I know a couple of guys who said they saw their lumber bid for a project go up by a third and they just said ‘screw it, I’ll put this on hold,'” said Brett Fritzel, owner of Meadowlark Development Group. “I’m scheduled to start digging a basement for a $300,000 home over here in Eudora, and I’m not sure I’m going to do it now.

“I’ve had a pretty good year so far, but if I have to raise the prices on my homes by 10 percent, that will shut it down. People already think prices in Lawrence are too high anyway.”

Lumber retailers said they expected prices to remain high through at least the end of the year. Garrison said he was telling his customers to expect another 8 percent to 10 percent increase in prices in October.

Builders also likely will be watching the weather closely during the next couple of days because if Hurricane Isabel hits the Eastern seaboard as expected, prices could jump even more.

“It could get worse,” Sowards said. “Hurricanes always jump the prices pretty good.”