Lumber costs bounced back up to $950 during mid-Christmas week.
Sky High Lumber Prices, Again
The housing industry, building professionals and consumers heaved collective sighs of relief when lumber prices leveled off to $454.20/ thousand board feet in August after reaching record highs in Q1 2021. Unfortunately, those sighs of relief has become sighs of anguish.
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Robust buyer demand for both new homes and existing home renovations, unusually warm weather and, once again, rising tariffs are fueling up lumber prices near their pandemic high. Mid-Christmas week sales contracts closed on the Nasdaq at $949.30.
Mickey Director of Trading and Growth Commodities Chip Setzer said, “The factors that caused the rise in lumber prices earlier in the year are still at play today. Weather continues to be a driving factor for both supply and demand. We’ve seen unseasonably warmer temperatures across the US which has allowed construction (and renovations) to continue well into the start of winter. This has allowed the demand for building materials to remain strong.”
Brief Look Back at Lumber Pricing Frenzy
May 2021 was the peak of lumber costs with sales contracts for two-by-fours soaring to $1,500/ thousand board feet. Prices then dipped to the mid-$400s during July and August until October when they began bouncing back up to the $600 – $700 range. Prices then ricocheted past the low-mid-$900s at the end of November.
According to Mickey Director of Finance Ross Price, the Biden Administration announced in November it would increase tariffs on Canadian softwood lumber from 9% back up 17.9%. Ross said that with these Trump era tariffs being put into effect again, prices “…may continue to rise to above $1,000, which was last seen in Spring 2021.
Now What?
Chuck Fowler, Chairman of the National Association of Home Builders, said that Biden Administration’s decision to raise tariffs on Canadian softwood lumber is the antithesis of the Administration’s push to create more affordable housing in order to narrow the homeownership gap.
Fowler said, “With the nation in the midst of a housing affordability crisis, the Biden Administration has moved to slap a huge, unwanted tax hike on American home buyers and renters.”
Adding that raising lumber tariffs essentially slaps on an extra $36,000 onto the price of an average new single-family home Fowler said, “This is the worst time to add needless housing costs onto the backs of hardworking American families.”
The Biden Administration said that the +8.9% increase to the previously existing 9% tariff on Canadian lumber was due to “antidumping and countervailing duties” and not “crude protectionism.
Meanwhile, the North American Wholesale Lumber Association is doing handstands about this tariff increase since it makes American lumber sources more competitive.
Thanks to Inman.
