The up-and-down pattern of lumber prices in recent months has not been seen in such frequency since the immediate post-World War II years, says a new report.
According to the National Association of Home Builders, the price of softwood lumber has been on a wild ride since the Covid-19 onset, with the producer price index doubling between the spring and fall of 2020, before dipping at the end of that year.
Last year then saw a tripling by early summer, with a decline of equal measure, and then a late-year doubling. “The monthly change in softwood lumber prices averaged 0.3% between 1947 and 2019,” says the report.
By contrast, in the last nearly two years, the change has averaged around 12%.
Price increases remained steady particularly from the 1960s to the 1980s, with an average 3% growth. Only in the early 1990s, during a brief recession, did the increase reach the 4% level, but still far below the volatility of the last two years.
Increases in 2021, note industry observers, were partly spurred by torrential rains and floods in the British Columbia, which supplies a significant portion of the U.S. lumber market.
Other factors: ongoing supply chain disruptions as well as unprecedented wildfires in California and Oregon that disrupted lumber production.
Notes the magazine Fortune: “The supply decline is simply outmatched by high demand from builders who are still selling homes faster than they can build them.”
Ultimately, the lumber price spike will be felt by consumers, contends the National Association of Home Builders, which notes that the hike has “added nearly $7,300 to the market value of the new multifamily home.”
By Garry Boulard
