Lumber Prices Continue to Price Home Owners — and Builders — Out of the Market

Filed in Advocacy, Trade by on September 15, 2020 37 Comments

frame of new house under constructionLumber prices increased 14.9% in August, marking the largest four-month gain since such data was first recorded in 1949 and the second-largest gain since seasonally adjusted data became available in 1975. Such a sharp increase has put unnecessary pressure on home owners and builders alike to figure out how to close the gap.

Former NAHB Chairman Randy Noel, a custom home builder from LaPlace, La., received a lumber quote early this month for more than $28,000 — twice what he had paid for the same lumber on a comparable project in February 2019. Oriented strand board alone, which Noel’s company uses frequently in its projects, had increased from $7.50 per sheet to $26 per sheet.

Because the homes have already been sold, Noel is looking toward alternative building materials, such as steel, to help minimize the cost increases. Not all builders will be able to close the gap, though.

“I know builders who have had to call customers and give them their deposit back and say, ‘I can’t build your house because of the price of lumber,'” he shared. “People already have their loan secured and can’t increase the price.”

Appraisals are likely to compound that issue, Noel added, as comparable sales of existing homes aren’t increasing sharply enough to factor into appraisers’ equations. Pent-up demand is also driving up the price of lots, which will need to be factored into home prices going forward as well.

The best immediate-term solution Noel sees on the horizon is to remove tariffs on Canadian lumber. “If lumber mills are struggling to keep up, [U.S. Commerce] Sec. Ross can remove tariffs temporarily to keep lumber prices from skyrocketing,” he stated.

NAHB continues working on all fronts to find solutions that will ensure U.S. home builders have access to a stable supply of lumber at reasonable prices to keep housing affordable for hardworking American families.

Share Your Lumber Story

NAHB would like to hear how rising lumber prices, and the limited availability of lumber, are affecting your business and the impact on housing affordability. For example, missed closing opportunities, increased costs, buyers being priced out of the market, etc. This will help us further illustrate to the Administration and Congress why a plan to address the lumber crisis is urgently needed. Share your story here.

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Comments (37)

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  1. Paul says:

    The US has timber rotting and burning on the stump due to logging restrictions within our borders, imposed by liberal policies. If builders want stable lumber prices, call your Congressman and demand eased restrictions on logging US Govt owned timber. The reason the US imposed a tariff on Canadian timber 25 years ago is because most logged timber in Canada is owned by The Crown. In the US, most logged timber is owned by private and corporate land owners. The Canadians do not have a labor advantage over US mills and they do not have a transportation advantage. If anything, they have a disadvantage due to the proximity to southern US markets.

    Canadian mills have the advantage of low stumpage costs, dictated by the Canadian Govt, which views timber for what it is, a renewable resource. In the US, Citizens do not view forests as cropland and they don’t want that forest across from their vacation home, where they take Fido for walks, logged or disturbed, therefore, they pay higher lumber prices when markets tighten.

    The NAHB is barking up the wrong tree. This issue is not about a Tariff, it is about government owned timber and the difference of opinions of Canadians vs. Americans on what that timber means to them. In Canada, when cut, they log up to the highway. In the US, there is a buffer of timber left between the highways and the logged tracts so that Americans don’t see a logging operation.

    When the massive blow down occurred in the Boundry Waters of Northern Minnesota 10 years ago, the lumber industry begged Govt to recover that timber before it rotted and became infested with Pine Bark Beatles. Their requests were ignored by the Govt and that timber became bone dry fuel waiting for a lightening strike. Years later, that timber burned in a massive forest fire, rather than being processed into the valuable lumber it could have been.

    Opening the National Forests to effective timber management and logging will have a much faster impact on lumber availability, while adding to the US economy and logging jobs, which are desperately needed in rural areas.

    Look for the solution. The US manages its timber supply better than any other country in the world, yet we don’t cut at a rate effective to economic growth or the health of the forests because the liberal media has stoked the fire of lies relative to logging practices for decades.

    Your Congressman can vote to open logging practices in the US, that will stabilize lumber supply, stabilize lumber prices, stabilize logging and mill jobs and make building costs predictable.

    • Rob says:

      This is where you should be hearing the crowd roaring, screaming, clapping and generally going wild….

      Rockstar status: Achieved.

      Well spoken, sir. My hat is off to you. While I do not care to cut ALL of our national forests at once, I do know that we could put them to MUCH better use for our nation’s economy by properly managing them. I agree wholeheartedly that it will only benefit the U.S. to do this….but I think 10-20% of the old growth at some of our war memorials should be left for historic purposes. That would be my only wish if it was decided tomorrow to harvest our entire timber “crop” (a term on which I also agree with you) to help our economy during these already tough times.

    • Josh Wynne says:

      Paul,

      Thanks for your intelligent, researched, and well-stated perspective.

      I agree with the author that the removal of tariffs offers an immediate opportunity to reduce costs in the short term, but your point about reassessing the allocation and use of our domestic timber resources is spot on. That is the only way we can resolve the long term issues related to cost control. It should be a no-brainer as I type this while millions of acres of prime timber land is own fire due to ridiculous restrictions on the managed harvest of trees in our wild areas.

      Hopefully the political polarization driving this “all or nothing” strategy of timber harvest can be set aside long enough for government to do what is right for the people, and for the planet.

    • stanley says:

      Well said ! I would further add the FEDS should mandate that the States develop and institute logging methods on the millions of acres under state forest control. State forest are completely ignored and mismanaged . It’s sickening to see the wasted natural resources when walking the forest in my home state of Mass. Furthermore the lack of proper management will eventually lead to vast amounts of diseased dyeing woodlands as well as catastrophic fires. States in the Northeast no longer maintain fire trail access as they did decades ago, if a fire should start there will be no controlling it under current conditions !

    • Chris Corder says:

      Well written and respected. We just saw the results here in Oregon of a massive catastrophic forest fire that killed many and destroyed lives due to the poor management of state and national forests. Hopefully the government will learn thier lesson but highly unlikely.

    • Kendall White says:

      Agreed. Mr Paul

  2. Janice Mansfield says:

    I sold my home in AZ, moved to PA thinking I would be buying a new home only to have their price go up and that pushed me right out of the market.
    Now what?

  3. Tim Cedar says:

    America has raised Canadien prices just as bad. I hope the Canadien government cancels out going us lumber orders and fulfill their Canadien lumber requirements, why should Canadians pay this outrageous increase, when majority of lumber goes to the USA.

  4. ena dominguez says:

    I had to stop my process of building my home, prices are to high, lumber and lot prices are higher can’t effort, if prices keep rising I will never own a home.

  5. Debbie Freeman says:

    We have been preparing to build our forever home. Financially paid our land and other bills off. All set for husband to retire in 4 years. The budget for our lumber went from 25k to almost 50k. This does not include the windows and doors!
    We have had to halt our build. We cannot see wasting 25k on lumber that is equal to 3 years mortgage payments!
    We have waited so long for our forever home!
    I guess it is like toilet paper and paper towels .

  6. Brad says:

    We had been gathering bids to begin construction on our home. Our builder called a few weeks after our initial lumber quote and said the lumber yard has gone up by $30k and by the follow week would increase again. As well as most interior door going out of stock and on back order and lead times stretching from 1-2 weeks out to estimated 5-6 weeks for many items. We’ve jus had to stop even thinking to start building at this time. Who know when we will be able to.

    • Debbie Weaver Freeman says:

      You all are exactly where we are. I can’t see paying 25k to 30k extra for lumber. That is 3 years of our mortgage payments!
      I am devastated! Interest rates are great and we have locked in. Just ready for our forever home!

  7. Wayne West says:

    There is absolutely know reason for the extreme price increases except the these futures market buyer (same bs happen with oil the negative price for a barrel of oil).

    I sure there is some truth to not harvesting American lumber correctly. But to think that weekend warriors are buying up all the lumber at a Home Depot is a joke. With lumber hit the lows of $2.59 a board foot in April we didn’t see the lumber prices decrease by half and now they’re saying that there’s such a demand and it’s got a double and triple from that price come on.

    I suggest everyone talk to a company like Clark Dietrich and get pricing on structure metal studs as I’m sure will see a decrease in metal stud price due to office buildings and big commercial projects starting to slow down ( if a labor can’t use a screw gun, then he/she is useless). You can always use CMU block. I did a price comparison with CMU block versus 2×4 stick construction with zip sheeting and I’m coming out virtually the same and you’re definitely going to have a stronger product with a better R-value at the end of the day (just remember the 3 lil pigs). There’s always a way, be creative.

  8. Joshua Rodriguez says:

    We have lived in our tiny home with a growing family for more than 10 years with the dream of adding onto the home. We finally are financially ready to do so. Two weeks after closing on my loan, I lose my job because of COVID-19 but decide to pursue the goal since I already borrowed the money. I have just enough to do it. I have already paid off the architects, engineer, the permit runner and have my permits in hand. I picked my builder out of the five that I researched and paid for my windows to be built. Two weeks before we break ground, the builder calls me and tells me that I need to add at least 20K to the contract before we sign it due to lumber increases and the price will likely go up in November.

  9. Dan says:

    Kinda blew my mind that a sheet of osb was ever $7—a 20 oz Coca Cola is over $2
    Surely the solution is to clear it the entire continent—leave a wasteland for future generations

    • Eric Call says:

      I’ve heard Lumber is only second ton petroleum products in America. It’s mostly owned by old old money. Knowing interest rates are so low and not going to increase and banks practicing open door policy on loans, I’m sure all building materials are going to double and triple for a while.

  10. Billie says:

    So, when COVID hit many businesses (including lumber manufacturers) prepared for an economic hit due to the restrictions and expected decrease in overall construction projects. Employees were laid off, plants dramatically decreased production and then BOOM! Contrary to expectations construction in the residential sector took off. As a result demand for lumber overtook the supply resulting in a shortage of materials. What usually follows when supply cannot keep up with demand? Prices increase. The current economic uncertainty coupled with how long the pandemic restrictions will continue mean that what we are seeing now will most probably continue well into the future months. Eventually the price of lumber will prohibit most consumers and building contractors from building.

  11. We have to get smarter (trained journeyman carpenter&millwight)
    Grandfather stated every time you hear a saw Run throw 10 dollars on the ground now it’s a thousand

    The waste is unbelievable in the past we cleaned the jobsite
    with a wheelbarrow now we send Large trucks or a dumpster observed job recently carpenters cut bottom plates threw in Trash HOW DO YOU FIX STUPID

  12. Willabe says:

    I’m glad I am a electrician…

  13. Cody Burnett says:

    There are tens of thousands of acres of Doug Fir and various species of giant pines that were destroyed by Pine Beatles in the San Juan Mountains. These trees can’t be legally cut for firewood. They are standing there rotting when they could be cut down to make way for new growth. It’s absurd to see a viable and useful solution go to waste for no good reason.

  14. J Allan Eckes says:

    Absolutely hilarious how so many here rationalize a stupidly initiated trade war and criminally mismanaged pandemic response by a moronic ‘president’ into ”we need to open up logging!’ I build homes with autoclaved aerated concrete block and steel on concrete pads. The only wood in my homes are rafters and joists IF I have a second floor! These homes save 70% of the energy of a typical code built wood frame home, they are nearly fireproof, flood proof (just wash it off and repaint) and in fact BULLET PROOF! And now, with wood so expensive due to ridiculous trade policies, I can build these advanced homes for the same or LESS than a stick built home.

    The dinosaurs died out too…

    • stanley says:

      Obviously you build in a part of the country where that type of construction is feasible and have no consideration for our industry as a whole. Lumber always has been and will continue to be a major part of home construction ! Lumber or any type of wood products is our most abundant / renewable natural resource on the planet when properly managed ! It is the moronic plastic generation that has caused wood products and our forest to be ignored for decades. “Plastic bags” are the number 1 example !!
      As far as trade war yes tariffs on lumber are ridiculous at this time which I’m sure will soon be resolved. However you can’t overlook the many positives as a result like the steel you mention, gypsum products, the materials used to manufacture the concrete products you use. Those are just a few things greatly benefitted by trade war. Steel at the height of Chinese control was over $800 a ton now it’s around a $100 !!

  15. Lynn says:

    Build modular home as an alternative. Build time is much shorter and home prices are locked in at closing so no increases are passed on going forward. Also larger manufacturing companies have a much more leveraged purchasing power keeping prices down.

    • John clegg says:

      Modular is the only way

    • Judy says:

      We ARE building modular (not mobile–BIG difference!)
      Construction has been delayed by 4 months (and maybe longer) because the company can’t get the lumber, etc. needed to move forward. Fortunately we “locked in” our price earlier but we’re still paying rent every month on a rental condo until the modular company can get materials. So modular does not solve the problem. Lumber and other building supplies are still required.

  16. Jerry Sinclair says:

    I am responding to ways to keep the pricing down. I am a small builder and I know that the real estate commissions are greater than my profit and I carry the risk. Maybe this might be the time to reduce fees a percentage or two. This would be a start. we would all benefit. If there are builders that are not building because the costs are up to high, this would allow maybe some of those homes to be built and then everyone wins. just saying!

  17. The increase has caused us to postpone any builds until first of the year with lumber quotes putting us over budget, and with all trades running behind due to lack of tradesmen the cost have made it that we can not be competitive and we don’t want to get pegged as being over priced which may hurt our sales when lumber adjust.
    It hurts after going through the great housing crash years ago to stall work but we feel we have no other options at this time.

  18. contact us says:

    How much have lumber prices increased?

    • BRENDEN D WENHOLD says:

      A basic doug fir 2x4x8 was $2.83 in May. Same 2x4x8 is $7.69 now. All forms of lumber are 2-3x the price they were just months ago, and even back in 2019 before corona.

  19. Wayne Edmonds says:

    During times of escalating prices of any material or product is when American technology and entrepreneurs join forces and bring a new product to market.
    The era of using wood for home construction will pass.

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