Wednesday, April 14, 2021

Escalating Lumber Pricing Add $24,000 to Average New Home

“Lumber is more than just trees.” I heard that yesterday when talking with a wholesaler friend about when lumber pricing should begin receding. 

He told me that the tree itself was simply the raw product and everything and every step in the process from felling the tree to delivering a 2x4 to a customer’s home has been hit with shortages and rising costs.

When the pandemic was in full boom last Spring and people were forced to work from home, many of those workers took their first stimulus checks and began remodeling projects. Lumber was still readily available at Lowes and Home Depot as many off-site factories and even site-built projects came to a screeching halt.

Then the restrictions were lifted in our industry and everything from sawmills having trouble ramping up fast enough to meet the surge in demand to trucking delays and worker shortages at lumber yards has added to costs, which are now getting passed on to consumers. Add in higher fuel costs, fewer young people wanting to do manual labor, shortage of truck drivers all the way down to finding skilled mechanics to keep those trucks on the road and it all makes sense that “Lumber is more than trees.”

All of those things will keep pouring fuel on red-hot home prices, making ownership less affordable for large swathes of the population.

Even though out-of-control lumber prices have added $24,000 to the price of the average single-family home, new home buyers are lining up to buy their slice of the American Dream of homeownership.

Related Article: Can US Off-Site Construction Industry Obtain Better Lumber

It’s hard to believe just two years ago Canfor Corp. and West Fraser Timber Co. were closing sawmills because of weak demand. 

In 2019, weak demand prompted a steady stream of output reductions and mill closures. That left big sawmills flat-footed amid the unexpected demand boom as the pandemic kept people indoors, sparking a wave of do-it-yourself upgrades, full-scale renovations and purchases of bigger homes.

Related Article: Is the Modular Construction Industry About to be Hit with Many Factory Closings?

In the parts of the country that have severe winter weather, off-site factories are usually begging for work to fill their production lines from Dec to Feb, however, 2020 was different. As we entered late Fall and early Winter, those same factories that usually had layoffs were swamped with many new housing and project orders.

Gary Fleisher is the Managing Director and contributor to the Modcoach Network and its affiliated blogs. 

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