Climbing Lumber Prices Continue to Complicate Home Building
Historically high lumber prices are forcing U.S. builders to call off projects.
According to the latest data from the Bureau of Labor Statistics, lumber prices increased by 14.9 percent from July to August. Lumber prices have risen almost 50 percent since April 2020, marking the largest four-month gain in the history of lumber price data.
These prices are putting a unique strain on homebuilders in a time where their businesses might otherwise be thriving. Demand for housing, and in particular single-family housing, is still high, with single-family housing starts increasing 4.1 percent in August.
“Consistent with surging builder confidence, single-family starts rose in August to meet rising buyer traffic,” said Chuck Fowke, chairman of the National Association of Home Builders. “Builders continue to face concerns in terms of rising lumber prices and supply chain shortages of other building materials.”
Home builders across the United States are now being forced to call off projects that have been in the works for months because the sharp rise in lumber prices made those projects simply too expensive.
“I know builders who have had to call customers and give them their deposit back and say, ‘I can’t build your house because of the price of lumber,’ ” said Randy Noel, a custom home builder from LaPlace, La. “People already have their loan secured and can’t increase the price.”
NAHB officials have been attempting to work with key officials in the U.S. government to prompt federal action on the rise of lumber prices. Those efforts include a public letter to the White House and a meeting with the National Economic Council.
“The White House is listening to us,” said Fowke. “They are moving and trying to get something done. They understand the importance of our industry.”
Strategies to lower the price of lumber include asking domestic producers to increase production, and working with Canada to lower prices on exports into the U.S. If lumber mills can’t keep up, Noel suggested U.S. Commerce Secretary Wilbur Ross could remove tariffs temporarily “to keep lumber prices from skyrocketing.”
The NAHB is encouraging home builders across the country to log in to BuilderLink, a website set up to help builders directly tell elected officials how high lumber prices are affecting their businesses. So far they say they have contacted more than 400 congressional offices.