NAHB Conveys Urgent Concerns on Lumber with Commerce Secretary

Filed in Advocacy, Housing Affordability by on September 28, 2020 14 Comments

NAHB Senior Officers and senior staff held a 30-minute virtual meeting with Commerce Secretary Wilbur Ross on Sept. 25 to discuss the growing problem that escalating lumber prices and supply shortages are having on the housing industry and economic recovery.

During the discussion with NAHB leaders, Ross repeatedly acknowledged how “critical” housing is to the U.S. economy.

NAHB Chairman Chuck Fowke and Second Vice Chairman Jerry Konter told the secretary how higher costs are affecting their businesses, with Konter adding that his business is planning for reduced sales due to higher lumber costs.

According to Random Lengths, lumber prices have skyrocketed more than 170% since mid-April, and the residential construction industry has absorbed the largest four-month increase in lumber prices since such data was first recorded in 1949.

NAHB Chief Economist Robert Dietz told Ross that this unprecedented lumber price spike has added more than $16,000 to the price of a typical new single-family home and $6,000 to the price of an average new multifamily unit.

Rising lumber prices are clearly making it much harder to build homes that are affordable to low- and moderate-income families.

NAHB Third Vice Chairman Alicia Huey and Immediate Past Chairman Greg Ugalde told the secretary what the association has heard from members about how the lumber crisis is hurting their businesses and impeding an even more robust housing upturn.

Secretary Ross told NAHB leaders that lumber mills are concerned that the ongoing housing upturn is temporary, and Dietz assured Ross that the solid housing market is sustainable.

NAHB stressed that between harvesting and mill capacities, the fact that most mills are running at two shifts rather than three is the greater problem.

View more NAHB actions on the lumber issue here.

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Comments (14)

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  1. mark everett says:

    Why do lumber producers have greater pull with the government than NAHB. Canadian softwood tarrifs are are a gift that keeps on giving to the producers, with home builders paying the price (and quit saying the consumer does, appraisers are NOT going to add anywhere near this increase to value). I have 15 homes under construction and i am holding 7 of them at foundation until I see some relief. If the NAHB doesnt have the pull to to get these tarrifs removed, im not sure why i am paying for my membership.

  2. Paul says:

    A $16,000 increase in new construction costs due to lumber price increases is equal to $44 per month on a 30 year mortgage. Efficiencies in construction and mechanicals such as tankless water heaters, LED lighting and improved insulation more than make up this cost.

    When considering that the average home will stand for 100 years, this $16,000 equates to $13 per month, over a one hundred year period. Less than the cost of two large Starbucks per month.

    Sawmills that run 3 shifts leave no time for maintenance, IF staffing could rise to meet the needs of around the clock production. Additionally, access to timber and viable loggers is, and always will be, an issue.

    • Shane Marler says:

      The problem with the increase is that the home will not appraise for the increased cost. Which leaves buyers to come up with more money for a down payment.
      You are correct on the small amount of increase per month on payment and over a 100 year term, but people aren’t financing for 100 years. The 16k is on a home cost to build of around 250k. The increase happend in about 1 month of time. Its a burden on the owner and builder to make adjustments for the house to appraise.

  3. must push for canadian lumber to give are mills time to gear up

  4. Glenys Karpavich says:

    Yes we need to get things moving in housing.

  5. A reminder of a driver in our industry is the low cost of mortgage loans. We have deferred all our new builds to spring 2021 in the hope pricing will come down. We are keeping busy w garages, porches, kitchen remodels. We say women sat at home for months and now say I want a new kitchen, porch… the men say I want a new garage! We are doing more of this type of work than ever in our history.
    Counting on realistic pricing in the spring or we are in trouble…. recognizing in Ohio we slow down on new construction in the winter.

  6. Mike O’Bryan says:

    This is really hurting sales, as we are going into a slow time of the year because of weather. Price gouging!!!

    • Sam Andrews says:

      I think This is a long term issue. There is going to be a long impact because of all the fires. We need to come up with solutions quickly or it could destroy a lot of the small companies

  7. Jeff Eckes says:

    We decided last year to specialize in building Passive House buildings from aerated autoclave concrete block so we have very little wood involved in our build. It was at that time a premium to build this kind of home but we felt the benefits (fireproof, flood proof, literally bullet proof) were worth the cost and that we would have a client base. Well, now with the costs of white wood skyrocketing our method is very nearly at parity with your typical code built frame house.

    I really do need to thank this administration for exploding the white wood market with ill advised tariffs, it has caused our method of building to flourish while sidelining our competitors. What is it they say about Karma again?

  8. John Blount says:

    our market is selling at a brisk pace . At this point we are out of inventory and will hold on all starts until prices stabilize , just too much to pass on to the buyer .

  9. Steve Caligiuri says:

    Housing is the backbone of the entire economy. We employ more trades than the auto industry or any other for that matter. A reminder to our elected officials in Washington: address the lumber shortage and price gouging and the results will be votes to keep you in office! Ignore them at your own peril.

  10. C B Skinner says:

    It’s general economics 101….. supply and demand. Not gouging.
    When C19 happened, none of us knew the future, but was sure our industry would stop. Well… it didn’t. Some states shut down, while others continued on. Not only continued on, but grew. The lumber yards were nervous to buy, the wholesalers were scratching their heads to figure out the future. Sales increased….. dealers reluctant to buy rail cars caused a flurry of business for the wholesalers. Inventory of products were drying up quickly. Dealers buying what they could find. Fast forward a month…And then a few states opened up for construction, meaning more demand.
    Wholesalers were buying from mills and brokers to have product, as the prices rose ( supply and demand)…. dealers kept buying so they could have products for the contractor. Which is worse… no product or a higher price ? In my 40 years in this industry, this scenario was never thought of. Allocation yes, but not this rapid rise in cost and a limited supply chain.
    Homeowners at home, looking at projects that were low on their list, now moved nearer to the top. A new deck ? Repair the deck ? Remodel the bedroom because I now have a 91 yr old Mother-in- law at the house. It was only to be a month.
    Gazebos and Pergolas….. People wanted, and needed, to be outside.
    Mills and manufacturing facilities were hit with their own employee C19 issues. Production shrunk. When the products were “ called ready”, the trucking issues raised its head.
    Month after month, dealers and wholesalers were questioning whether to continue their purchases or not ?This has to stop, right ?
    Oh… then came along a few storms that ravaged parts of our country where the raw materials come from. The western fires have caused buyers to look to the Eastern US mills for products, causing more demand.

    Well, off my soapbox now. It’s just not a simple situation we are in, but many factors have been in play with supplies.
    All this will change, sooner than soon, and we can look back on 2020 as a “character building year” in our industry. And yes… there are many a character in our industry.
    Bless us all and bless them.

    I, fortunately, have not lost anyone to C19, some sick, but no losses. For those of you who have, that’s much bigger than the price of a 2×4.

    God bless you and the USA !

    PS: These are my personal comments and do not in any way, represent my employer. CMA.

  11. MAC SMITH says:

    Lumber cutters, or Stump Pricing is being refused in SC because they fear the lumber price is temporary, and said that mills are not buying lumber.
    True or not, this was said.

  12. Bill Blair - Dickerson Well Drilling,Inc/ Blair Family Properties LLC says:

    I appreciate what C.B Skinner started. We as humans tend to jump on the bandwagon of blame without looking deeper. The largest issue in my very simple opinion is the regulatory agencies. Those of us that were going strong before 2008 saw an exponential increase in permit fees when we had the downturn while we were barely keeping up on our profit after our risks of operating our businesses.

    I was on an oversight committee at the state ( OGWA- Groundwater advisory committee) during that time. The OREGON Water Resources Department made an “ administrative “ decision to increase the permit for a well from $225.00 up to $525.00 in the name of being able to study water concerns more closely. We as citizens had already paid for the well reporting to be electronically filed and readily available online to anyone who wishes to study water availability in the state. It was simply a way for government employees to cover their incomes/ retirements . Do the simple math. I do not believe that any of you increased your profits anywhere near to what the states and counties did during that “ opportunity” that they took.

    Besides drilling, our family has owned and managed timberland For 60 years. What we have realized is that it is way more profitable to sell our timberlands and reinvest them into daily income Generating properties. If the price of timber drops, there is no reason to wait 40-60 years for a large payoff that is hammered by the IRS.

    We just were involved in a legal battle to retain our rights to build on a 79 acre parcel that we had the written permission to build on. In 1993, We had already permitted a septic system, installed it and got it approved. We then drilled a 15 gpm well in 1995 along with building about 2000 feet of road systems on the property. We had to hire an excellent lawyer and pay him about $30,000.00 to fight this county. The point in this story is to allow people to imagine what the price of land would be if there were parcels like this opened up to a common sense 10-20 acre parcels. I hate parcels under 5 acres for wells and septic systems, but let’s get some common sense in our land use.we finally got approved for a 10 year right to build after having gone through LUBA. Those costs are a little more expensive that a lumber price increase that requires expensive equipment, etc to produce.

    Cut the dishonest system development fees from the dead weight and you will see an explosion in live-ability for Oregonians. Our economy will boom along with families being able to afford a home in a nice neighborhood or acreage.

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