Lumber prices have tripled since April 2020. Factors such as tariffs, COVID-19 lumber mill shutdowns, wildfires, flooding, and more have severely affected the supply and demand of lumber. Here’s a brief history of the increase in lumber prices and why now is the best time to invest before the prices further increase.
The heightened prices of lumber began long before the pandemic. In 2017, 20% tariffs were placed on lumber imported from Canada – a major supplier for the U.S. – raising prices considerably. In fact, the National Association of Home Builders wants the Trump administration to take steps to halt or reverse the tariffs placed on lumber.
Around March of 2020, when COVID-19 began to spread across the country, lumber mills in both the United States and Canada halted production. Not only were operations curtailed because of lockdown orders, but lumber producers forecasted a plunge in demand. They did not anticipate the spike in DIY projects and resurgence of the housing sector. With production back in action, lumber producers have been able to hike up the prices because of the limited supply and increased demand. Both real estate developers and independent contractors are feeling the negative economic effects.
Real Estate Demand:
The demand for new single-family homes remains high. Despite the economic recession from COVID-19, new home sales are up 3%. Because of the lumber prices and supply, many construction projects have been delayed. Lumber makes up about a fifth of materials costs when putting up a new home, so the price increase puts a huge dent in the budget.
Quarantine has become the perfect opportunity for homeowners to begin a project on their home. That being said, lumber materials have been flying off the shelves in Lowe’s and Home Depot. Demand for materials is no longer just in the construction industry, but by homeowners as well.
More recently, the supply of lumber is decreasing because of wildfires raging across the west coast. Logging operations have subsequently shut down and the supply to lumber mills in some areas is threatened. Not only is the supply of lumber decreased, but the demand for lumber is increased. More than 6,000 structures have been destroyed by wildfires in the past year and homeowners and landlords are reconstructing the homes and buildings they lost. It has become the perfect storm for the construction industry. Lumber prices are now even more increased.
Floods in the South:
In late winter and early spring of 2020, weeks of heavy rain inundated a large portion of southern states. Thousands of homes were flooded and destroyed by the damaging effects of this historic flooding. Reconstruction of homes in the months following the floods has been another causative factor of decreased supply in materials.
Invest now. By getting on our schedule, you will save money before lumbar prices continue to rise. Not only that, but with current low gas prices, the shipping of materials will cost even less. That being said, today’s price is the lowest our price will be.