Through-the-roof lumber prices affect everyone involved with home building, buying, selling and remodeling.
Lumber Costs Going Up Again
Despite the fact that lumber prices are currently -22% lower than they were at their peak pricing near the end of 2020, lumber now costs three times what it did pre-pandemic, according to Random Lengths.
Obviously, such elevated lumber costs make building a new home and/or remodeling an older one more expensive. The National Association of Home Builders (NAHB) estimates that the cost of lumber now adds a whopping +$18,600 to the price of a newly built single-family home. Additionally, this escalated lumber price adds close to $7,300 to the cost of an average multifamily home for which households pay +$67/month more to rent a new apartment.
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The NAHB based its cost projections of lumber estimates on data from the Builder Practices Survey conducted by Home Innovation Research Labs. David Logan, director of tax and trade analysis with the NAHB, said, “With a historically low level of overall housing inventory and solid demand due to low mortgage interest rates and favorable demographics, new construction has been unable to add additional needed supply to the market, resulting in unsustainable gains for home prices.”
Strangled Supply and Unabated Demand for Lumber
Sawmills simply cannot keep up with demand for both new housing and remodeling essentials on older homes. Labor shortages have consistently plagued lumber output since the start of the pandemic. Additionally, remodeling professionals and amateurs alike have upped their demand for lumber as homeowners are “making due” by repairing, renovating, repurposing and/or adding on to their older homes to make them more livable or to spruce them up for resale at higher valuations.
Other issues affecting this supply and demand imbalance include ongoing supply chain issues, stringent Trump-era tariffs on Canadian lumber imports that have been reinstated by the Biden administration and severe wildfires in both British Columbia and the American West.
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On top of all that, transporting whatever lumber that is produced to ultimate destinations around the country has been hampered by trucker shortages.
Thanks to CNBC.
