Builders Discuss Rising Lumber Prices with Commerce Secretary Ross

Filed in Capitol Hill, Leadership by on June 19, 2018 25 Comments

NAHB Chairman Randy Noel, CEO Jerry Howard and senior staff met today with Commerce Secretary Wilbur Ross to discuss the growing problem of escalating lumber prices that are being exacerbated by tariffs on Canadian lumber imports into the U.S.

Following the meeting, Noel issued the following statement:

“Today, we discussed with Secretary Ross our mutual concern that lumber prices have risen sharply higher than the tariff rate would indicate, and that this is hurting housing affordability in markets across the nation. Rising lumber prices have increased the price of an average single-family home by nearly $9,000 and added more than $3,000 to the price of the average multifamily unit.

“We applaud Secretary Ross for acknowledging the gravity of this situation and expressing a willingness to look into the possibility that factors other than the tariff may be manipulating the market.

“We also encouraged the secretary to return to the negotiating table with Canada. It is essential that the two sides resume talks and hammer out a long-term solution to this trade dispute that will ensure U.S. home builders have access to a stable supply of lumber at reasonable prices to keep housing affordable for hard-working American families.”

Facebooktwitterlinkedinmail

Tags: ,

Comments (25)

Trackback URL | Comments RSS Feed

Sites That Link to this Post

  1. Rising Lumber Prices the Talk of the Town | Logix Blog | June 26, 2018
  1. David Koster says:

    I sincerely applaud Jerry and Randy for their efforts on this crucial topic. The cost of lumber is crippling many geographical markets and price points across geographical regions. Any benefits we have received from tax cuts and deregulation have been lost with this one issue. I don’t think the administration understands what is happening. Moreover, it has clearly not been on their priority list. Let’s all hope this recent meeting changes things.

    • Kevin Humphrey says:

      Wilbur Ross is likely the most intelligent and competent commerce secretary the USA has ever had. I’m confident he understands the situation and has a practical plan that will ultimately benefit our industry and our country. If you have not watched videos of Mr Ross in action, I encourage you to do so. There are many videos available on the Internet.

      • David Koster says:

        I have been an admirer of Mr. Ross in the past as well. He is in fact a very smart man. But he has his biases and he favors large companies and industries with international operations – which is most definitely not home builders. I don’t know if there is an internet video available, but on a recent CNBC interview he said that the lumber tariffs were having only a marginal effect on new home costs and that the remainder of home price increases were due to increased builder profits in the improving new home market. Moreover, the chief U.S. Trade Negotiator stated a couple of months ago that solving the lumber issue with Canada “was not a high priority”.

        Let’s hope that one or both have changed their mind recently.

  2. TP says:

    Just another way of taxing the common working man even more. That is ultimately who pays for all these fake tariffs that are supposedly punishing foreign gov’ts and companies.

    • Mike Marich says:

      I completely agree with you. We are definitely seeing a down-turn in our business here in the Southwest suburbs of Chicago. Our market has already been suffering from the crippling property tax rates in this horrible state and now we have seen lumber costs rise almost 60 percent. When will this administration see what is going on? Could it be that they see and just don’t care? I hope not.

    • Mike Marich says:

      The lumber futures market is being manipulated by speculators and large northern mills. All you have to do is look at the response from large lumber yards in your area. Once the futures price had gone down to around 530 from 657 they started quoting the “cash price” to us. All this indicates is that the little guy is, once again, being taken advantage of by the big money investors and speculators. I really wonder if anything will be done at all.

  3. Ryan Jeffers says:

    To keep housing affordable for hard working Americans we will also need to focus on other aspects of the affordability equation such as cost of ownership. Building more resilient and energy efficient homes can bring the cost of ownership within the reach of more people especially first time home buyers. An ICF built home for example can significantly lower utility costs, lower cost to insure and lower cost to maintain, thus making a home much more affordable without significantly increasing the cost to build.

    • Chad says:

      You’ve never priced one out then. Trades don’t price out things the same with the different construction techniques and don’t forget the interior walls and roof system are still wood.

      • David Koster says:

        Exactly Chad. I’m fine with all things “green” and “efficient”. But supporters of these construction standards can never show a reasonable return on investment to the homeowner, nor do they take into account that some people simply don’t have the resources to make the up front investment. This is particularly true in the affordable home segment where there is huge demand and almost no supply.

  4. Don’t forget the framers who are chasing the cost of lumber as it escalates as well. bid vs contract can change is a day’s time.
    Rick White

  5. Norman Hyman says:

    The tariffs on Canadian lumber are unnecessary unreasonable, and an impediment to affordable housing. But Trump doesn’t/hasn’t built single family homes. The tariffs don’t affect office buildings and hotels.

  6. BLS says:

    Rising lumber costs are just the tip of the iceberg. Add to them steel and aluminum tariffs, and other factors that are increasing the costs of homes from the ground up (foundation, mechanical equipment, etc.). At the rate we are ‘negotiating’ with long-standing interntaional trade partners, it doesn’t seem likely things will improve in the near future.

    • David Koster says:

      I agree BLS. Lumber may have the single biggest impact, but we are getting hammered on multiple fronts. As direct users of these commodities we feel the impacts immediately. To make it worse, Builders typically work on such small margins that there is no room to absorb the price increases.

  7. Troy Freed says:

    Let’s all hope that the meeting nets good results.
    With all the wild fires and hurricanes last fall, combined with the new tariffs. I figured it cost approximately nine-twelve percent more on a Three Hundred Thousand dollar new home from one year ago.
    So we can not control mother nature, but we can set down together and make a fair deal for all parties
    This administration should have this as priority to help bring all building cost down.
    Also we need to clean up permitting consitantacy and cost.
    Also address bad code changes that have pushed the price of new homes up but added cost to the build.
    Also let’s not forget that fuel has went up sixty to eight cents also in the last year
    So let’s get together and build this new trade policy immediately.

  8. All this because you couldn’t stand Hillary. Way to go

  9. Carroll "Gene" Raley says:

    Regulations has removed us from the world market for soft wood. I understand habitat for animals but we cannot allow our soft lumber industry to go to seed while other countries ship product to us. We must decide if we want to continue with producing soft wood in great enough quantities to be an industry or cede the industry to other countries and remove the tariffs that are in place to subsidize the anemic industries here.

    • David Koster says:

      Respectfully, those are two separate issues. We should absolutely remove all regulations that are unnecessarily restricting domestic production of softwood lumber. That will unleash our domestic industry’s ability to compete. But we should not use tariffs to drive up costs in order to raise government revenue or protect certain industries.

  10. Dale Gruber says:

    It’s good that the NAHB Leadership was able to meet with the Secretary. That is a positive on all this. The real problem in my opinion is the unknown on all this so lumber suppliers are covering themselves for worst case scenario’s. So I believe the key to getting lumber prices down is to come to a final trade agreement soon. The negotiating needs to come up with a solution fast so lumber suppliers can know what their costs are and then can adjust prices accordingly. I am sure there is also other factors but in my opinion this is the major reason of price increases. Keep up the dialog to get this fixed!!

  11. Steve Carroll says:

    I read on this forum last year that most of the softwood suppliers in Canada are owned by American companies that harvest from both countries. So who is President Trump trying to punish? The little guy, that’s who.

  12. Michael W Carlson says:

    I too am in the home construction industry but I was a logger for 25 years. The Canadians have been dumping subsidized lumber into the US for years. While I am affected by the lumber prices, I especially know how depressed the timber industry has been since the late 90s. The low lumber prices and minuscule allowable harvest levels from USFS forests due to environmentalist have forced hundreds of the sawmills in the USA to close and be sold as scrap. We now have too few mills. This is an issue with Canada that has to be dealt with. Their system of standing timber pricing is subsidized while the US timber sales are sold to the highest bidder who has to gamble the log markets will stay high enough to sustain the price the timber company paid for the logs when the logs are harvested. The timber business is high risk for low pay.
    Additionally, the bug kill and fire damaged timber in the interior of BC has nearly been cleaned up so a reduction in Canadian harvest level is happening regardless of the markets. We are experiencing a supply and demand situation. BUT the high lumber prices have resulted in high log enough log prices that the remaining mills here in Washington are plugged with logs. I was told by a friend who is a logger that the log market dropped $100/M last week because the mills are plugged with logs due to high prices. Stay tuned high inventories may force lower pricing for wood products.

  13. SMC says:

    Ready, fire, aim.

    That seems to be the head of this administration’s approach to virtually all policy decisions. Consequences seem to be an afterthought.

    At a time when the national savings rate is a paltry 1.5%, in the face of a growing economy, trade deficits are a way of supplementing our low national savings rate. What’s going to happen when the next recession hits?

    Not a pretty thought.

  14. Richard Hills says:

    We need to negotiate with Canada. This tariff has been going on for years and nothing has been done to stabilize the situation. This has been going on for several administrations but our current administration has exacerbated the issue. Every time we see an uptick in business we get hit with lumber increases. In addition we get increases in all of our suppliers. Greed is part of this equation.

  15. Vernon Young says:

    The real problem is the gouging by the big producers in the U S. The export of logs must stop now, just as we did oil when it was inflated. The log truckers in East Texas have no place to go because the mills will only buy hardwood. Is something wrong here, like a conspiracy?

  16. Mark Disosway says:

    Just use wood for load bearing and 25ga steel for interior walls. Cheaper and easier to install with tin snips and screw driver.

Leave a Reply

Your email address will not be published. Required fields are marked *

Advertisement