Supply chain and other issues are rearing their ugly head again as skyrocketing lumber prices area adding a cool $18,600 to the price of new homes. According to the lumber industry trade journal Average Lengths, the price of framing lumber topped $1,500 per thousand board feet, an increase of 67% since late August.
The cost of lumber has dramatically shifted during the pandemic, due in part to a work slowdown at lumber mills dating back to April 2020 when the COVID-19 pandemic took hold and sawmills slowed production in anticipation of reduced demand. However, the opposite happened. People started heading to big-box stores like Home Depot and Lowe’s to begin do-it-yourself renovation projects. Moreover, the housing industry weathered the storm much better than predicted and demand remained strong, yet lumber mills did not ramp up production accordingly, which resulted in record-breaking lumber prices.
Other reasons for the price surge include:
· Ongoing supply chain disruptions
· A doubling of tariffs on Canadian lumber imports into the U.S. market, increasing price volatility
· A strong wildfire season in the western United States and British Columbia
The lumber price increase has also affected added $7,300 to the average value of new multifamily homes, adding $67 a month in costs for families renting new apartments. If you’ve been on the fence about buying a home, there’s no time like the present.