The forces of supply and demand have deprived the market of lumber inventory at exactly the same time that people wanted more lumber. The pandemic interrupted supply when lumber mills shut down or reduced activity so that workers could have more distance between each other. Concurrently, people stuck at home turned their attention to remodeling projects as an alternative to cancelled social events and vacations.
Very low interest rates on home loans have also boosted demand for homes. Work-from-home opportunities inspired more people to move out of big cities and look for suburban homes. Home builders hoping to supply people with new homes exacerbated the demand for lumber.
Effect On New Home Prices
According to the National Association of Home Builders, shortages and price increases for raw materials have pushed home prices up by an average of $24,386. In many instances, builders have raised their prices in the hope of slowing demand until they can get enough materials at better prices. Per a Zonda survey, about 70 percent of builders reported raising prices for this reason.
No Price Relief Any Time Soon
Notably, May futures contracts per 1,000 board feet for 2x4s, are trading at $1,158. In a single day of trading the price went up $32. Although mills have increased production, experts expect a backlog of demand to keep prices high through the year.
How has your construction company had to adapt to the spike in lumber prices? Have other construction materials cost increases, such as the rising price of steel, affected your budgeting for components like bolts and anchors?
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Random Lengths, the most widely circulated and respected source of information for the wood products industry, provides unbiased, consistent, and timely reports of market activity and prices, related trends, issues, and analyses. The company’s focus has traditionally been on North American markets, but as international trade in wood products has increased, we have expanded our coverage to prices and developments in overseas supplying regions. We also strive to deliver information to our customers in a timely and economical manner, utilizing modern technology.
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About The National Association Of Home Builders
The National Association of Home Builders of the United States strives to protect the American Dream of housing opportunities for all, while working to achieve professional success for its members who build communities, create jobs and strengthen our economy.
NAHB represents the largest network of craftsmen, innovators and problem-solvers dedicated to building and enriching communities. Operating at the local, state and national levels, the NAHB Federation helps its members gain a competitive advantage through:
- Knowledge: Offers education and other resources members need to expand their businesses and achieve personal success.
- Networking: Creates opportunities within a community of home-building professionals for members to build key relationships and increase their profitability.
- Expertise: Develops solutions for members’ businesses through access to experts who provide insight and information.
- Advocacy: Improves the business environment on Capitol Hill, in state capitols and in local communities by eliminating excessive regulations.
- Savings: Saves members money through advocacy efforts, exclusive services and products, and the Member Advantage program.