Lumber Prices Rising Again Despite Federal Action on Tariffs
Lumber prices remain volatile, complicating home building and prompting action from the federal government.
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According to data from Random Lengths reported by the National Association of Home Builders, lumber prices in the U.S. are climbing again after a brief period of decline. Mid-December lumber prices are now sitting at more than $650 per thousand board feet, a nearly 20 percent increase in the last four weeks but still far from the all-time high price of $950 per thousand board feet back in September.
This price increase directly follows news that the U.S. will be cutting tariffs on Canadian lumber imports from 20 percent to nine percent. There is some optimism this decision will lead to an overall reduction of lumber prices once the new tariff rates start to take effect in mid-December.
“This is a step in the right direction, as tariffs have contributed to unprecedented price volatility in the lumber market, leading to higher prices and harming housing affordability for American families,” said NAHB Chairman Chuck Fowke. “The United States needs to work with Canadian officials to end the tariffs and achieve a long-term, stable solution in lumber trade that provides for a consistent and fairly priced lumber supply.”
While the ongoing struggle over tariffs between the U.S. and Canada has certainly contributed to high lumber prices, it is far from the only cause. Over the course of 2020, high demand for housing and a renewed interest in home renovation prompted by stay-at-home orders have driven up demand for lumber. On the production side, coronavirus-related shutdowns early in the year severely hampered supply lines, limiting the amount of lumber available to be sold.
The NAHB reports that supply may be even more limited heading into the new year because lumber mills chose to slow production in winter months, despite overall construction activity outpacing seasonal norms.