Lumber Prices Soaring
A lot of consumers are asking, “Why are lumber prices so high?”. Indeed, lumber prices have soared 50% since a lull in prices from March to September, 2020. So what does that mean for a consumer in the Pacific North West?
Many factors are at play for the soaring prices in lumber.
Many mills closed during the Spring of 2020 due to the COVID-19 stay at home and social distancing guidelines by state and local governments.
When prices fell between March and April in 2020 as a result of COVID-19, the mills projected that the housing industry would be adversely affected, therefore anticipated a large drop in demand.
Mills were not prepared and did not anticipate the massive demand from do-it-yourselfers and large retailers during the pandemic.
Do-it-yourself demand has not declined much as states re-opened and construction demand far surpassed mills’ projections.
The housing market has held steady and even dramatically accelerated in some areas such as our market here in North Idaho.
All of these factors have caused unusual supply and demand for the contractors and suppliers, especially for this time of year. With supply low and demand high, suppliers are still trying to catch up to orders, which is making it rather difficult for everyone. Builders and trades alike are being forced to place orders without delivery dates or pricing.
Another driving factor for the spike in lumber prices is the impact of tariffs on wood from Canadian mills which continue to cause elevated prices for the U.S.. The lumber tariffs averaged more than 20% on Canadian imports in the U.S. market. A lot of the sheet products such as OSB and Plywood come from Canada. And, because of the mills being shut down this last spring, we are seeing significant shortages here in the Pacific North West.
The high cost of lumber is undoubtedly affecting not only new construction prices, but older-built home prices as well. Prior to the COVID-19 pandemic, there was already a housing shortage in our area. This means that clients already under contract for a new home are immensely feeling the pain of the lumber market. Obviously builders are trying to keep the existing contracts viable. However, there comes a point when builders can no longer absorb the climbing costs of the lumber packages. People looking to build have a few options to reduce the sudden jump in costs by reducing structure size, revisiting different finishing options such as countertops and flooring, or even delaying the project until a later date.
So, what does this mean for the future of lumber prices? As of today September 21, 2020, the current price of lumber is $578.600 per board foot. Data indicates that the commodity price has been in an upward trend for the past year. So it is really unknown how to predict lumber prices going forward. The sudden rise in lumber prices could undoubtedly have major implications for the home building industry.
If you are considering building a new home in the next year in the Priest River or Priest Lake area, feel free to connect with us to chat about how the current construction market might affect your plans.
Cedar Creek Custom Homes