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International Longshoremen’s Association members went back to work on Friday after successfully negotiating a 62 percent cumulative pay raise over the next six years. ILA members will keep their current pay until Jan. 15, while union leaders continue to push for other demands, including banning the use of automated robotics at the ports.
“Today’s tentative agreement on a record wage and an extension of the collective bargaining process represents critical progress towards a strong contract,” President Joe Biden said of the deal on Friday. “I congratulate the dockworkers from the ILA, who deserve a strong contract after sacrificing so much to keep our ports open during the pandemic. And I applaud the port operators and carriers who are members of the U.S. Maritime Alliance for working hard and putting a strong offer on the table.”
The strike threatened to upend the U.S. economy, an NPR report said, as dockworkers process more than $2 billion in imported goods every day. During the two-day strike, shoppers began panic shopping at warehouse retailers such as Sam’s Club and Costco. The latter ran out of toilet paper at multiple locations, prompting the American Forest & Paper Association to call for calm.
“The American Forest & Paper Association is aware of reports of toilet paper shortages, which some have attributed to the current port strike,” Heidi Brock, the group’s CEO, told CBS MoneyWatch on Thursday. “While we continue to urge the ILA and USMX to quickly bring an end to this strike to restore our members’ access to export their products, we would like to stress we are not aware of any expected impact to tissue product delivery in the U.S.”
Although access to popular foods and beverages — including seafood, bananas, chocolate, beer and wine — were most at risk during the strike, multiple housing market leaders had feared the effects would extend to essential building materials and ruin the momentum seen in the new-home market.
“We’re watching the situation closely, given that just under 10 percent of building material products are imported. However, a significant portion of that is carried by rail, rather than via port,” National Association of Home Builders Chief Economist Robert Dietz told Realtor.com ahead of the deal. “Nonetheless, a strike lasting more than two weeks could have significant impacts for the economy and the construction industry.”
Dietz’s fear was founded on what happened with lumber futures in the early years of the pandemic, where lumber futures reached record highs amid supply chain issues and former President Donald Trump’s tariff against Canada. In 2021, the rise in sales contracts for two-by-fours, steel and gypsum (a.k.a. drywall) tacked an extra $35,872 onto the price of an average new single-family home.
Supply chain and labor issues pushed new home sales down 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 the dock strike is no longer a threat, mortgage rates and affordability will continue to be an issue for new-home buyers.
“First, buyers who are back in the market will find they have more options. The inventory of existing homes has been increasing as more owners are listing their homes for sale, and lower rates will encourage more homeowners to list,” Bright MLS Chief Economist Lisa Sturtevant told Inman last week. “As a result of more existing homes on the market, there could be less demand for new homes.”
“Second, historically, lower mortgage rates tend to lead to an increase in price growth, but this year affordability is still a major constraint on the market,” she added. “So, while there may be more buyers in the market, home builders might find that consumers’ purchasing power has not increased.”
