Soaring lumber prices are adding thousands of dollars to the cost of a new home, pricing out millions of potential homebuyers and impeding the residential construction sector from moving the economy forward, according to the National Association of Home Builders.
“The price of lumber hit a record high this week and is up more than 170% over the past 10 months,” says NAHB Chairman Chuck Fowke, a custom homebuilder from Tampa, Florida.
“The NAHB is urging President Biden and Congress to help mitigate this growing threat to housing and the economy by urging domestic lumber producers to ramp up production to ease growing shortages and to make it a priority to end the tariffs on Canadian lumber shipments into the U.S. that are exacerbating unprecedented price volatility in the lumber market.”
Lumber price spikes are not only sidelining buyers during a period of high demand, they’re also causing many sales to fall through and forcing builders to put projects on hold at a time when home inventories are already at a record low.
“The increase in lumber prices is forcing our company to delay construction starts, which will only exacerbate the lack of supply in our market,” says NAHB First Vice Chairman Jerry Konter, a homebuilder and developer from Savannah, Georgia.
Alicia Huey, a high-end custom homebuilder from Birmingham and second vice chairman of NAHB, says the price of her lumber framing package on an identically-sized home has more than doubled over the past year from $35,000 to $71,000.
“This increase has definitely hurt my business,” she notes. “I’ve had to absorb much of this added cost and even put some construction on hold because I would be losing money by moving forward.”
“Appraisers are not taking rising lumber costs into account, which is disrupting home sales and preventing closings,” adds NAHB Third Vice Chairman Carl Harris, a custom builder from Wichita, Kansas.
Housing has been an economic bright spot amid the COVID-19 pandemic, but the industry’s potential to lead the economy forward is limited as long as lumber remains expensive and scarce.
A recent survey of NAHB members reveals that 96% said inconsistent access to building materials are their most urgent concern. In turn, supply shortages are leading to soaring prices.
And it’s not just skyrocketing lumber prices that builders are dealing with. The price of oriented strand board has more than tripled since April.
“Clearly these price increases are unsustainable, particularly in light of a continued housing affordability crisis,” Fowke says. “Given this ongoing period of high demand, the Commerce Department should be investigating why output from lumber producers and lumber mills are at such low levels.”
To learn more, visit the Home Builders Association of Greater Chattanooga at HBAGC.net.