Record High Lumber Prices Still Hindering Home Building
The problems that plagued the home building industry in 2020 seem to have followed it into the new year.
After normalizing slightly at the end of 2020, lumber prices steadily climbed back up throughout the first weeks of 2021 and hit record highs in early February. This on-going surge in the cost of lumber and other construction materials has become a major issue for contractors and home buyers, complicating home building across the U.S. and harming housing affordability at a time of historic demand.
“According to Random Lengths, the price of lumber hit a record high this week and is up more than 170 percent over the past 10 months,” said Chuck Fowke, chairman of the National Association of Home Builders and a custom home builder from Florida.
Home builders nationwide are now being forced to reckon with the consequences of this lumber price spike in real time. Home starts are being pushed down the line until building costs settle, while builders with projects in progress find themselves contending with increasingly volatile prices.
“The increase in lumber prices is forcing our company to delay construction starts, which will only exacerbate the lack of supply in our market,” said Jerry Konter, first vice chairman of the NAHB and a home builder and developer from Georgia.
Rising lumber prices are a compounding problem for the entire housing industry. Builders can’t complete projects under budget because those budgets were set when materials prices were much lower and more stable. This, naturally, drives up the cost of the home — a price hike passed on to the home buyer.
“In such a fragile marketplace, consumers cannot afford to add another $10,000 to $30,000 for the frame package,” New York-based builder Tabitha Casamento told the NAHB. “I have repeatedly asked when this will normalize from a national supplier, but there’s no end in sight.”
Over the past year the NAHB has asked the federal government multiple times to take steps to correct the situation. Last August the association even published an open letter to then-president Donald Trump, asking him to address the rising cost of lumber so the housing industry could continue to serve as an economic stimulator.
Now with rising material costs continuing into 2021, the NAHB turned to new President Joe Biden and his administration for help in normalizing lumber prices.
“NAHB is urging President Biden and Congress to help mitigate this growing threat to housing and the economy by urging domestic lumber producers to ramp up production to ease growing shortages and to make it a priority to end tariffs on Canadian lumber shipments into the U.S. that are exacerbating unprecedented price volatility in the lumber market,” said Fowke.