The steady rise in lumber prices is having an impact on both the pace of new home building as well as new home sales, according to a new industry report.
In its just-released Rising Lumber Prices and Lack of Supply Threaten Consumers’ Housing Options, the National Association of Home Builders says current lumber prices are nearing an unprecedented high.
Matters have only been made worse by the uncertainty of securing lumber for a home’s construction in a timely fashion, and “whether or not the homes will appraise at the correct price to reflect those rising prices.”
Framing lumber prices were at a little over $500 per thousand board feet early last summer, before taking off on a wild ride seeing the price steadily rising to more than $900 per thousand board early this year.
The Random Lengths Framing Lumber Composite price is now at $966 per thousand board.
While overall building materials were up by 5.4% last year, software lumber prices shot up by 12.5%. Prices for southern yellow pine, often used for decks and fences, as well as strand board, used for walls, are also at an all-time high.
In response, the national median home price increased to an all-time high of $320,000 late last year, surpassing another record high of $313,000 which was set in the third quarter of 2020.
Adding to the home builders’ market uncertainty, says the NAHB report, is the “prospective homeowners’ financial positions,” which includes the possibility of unemployment and a large fixed income Baby Boomer retirement market apprehensive about committing to big purchases.
The NAHB has gone on record asking President Biden and Congress to urge domestic lumber producers to ramp up production to ease the shortage challenge.
Although the Commerce Department in December reduced tariffs on Canadian lumber shipments from 20% to 9%, the NAHB says it would like to see those tariffs ended altogether.
By Garry Boulard
