Record-High Lumber Prices Add $24K to the Price of a New Home

Filed in Advocacy, Material Costs by on February 22, 2021 97 Comments

Lumber prices have skyrocketed more than 180% since last spring, and this price spike has caused the price of an average new single-family home to increase by $24,386 since April 17, 2020, according to NAHB standard estimates of lumber used to build the average home. Similarly, the market value of the average new multifamily home has increased by $8,998 over the same period due to the surge in lumber prices.

The latest Random Lengths prices as of mid-February show the price of framing lumber topped $975 per thousand board feet — a 180% increase since last April when the price was roughly $350 per thousand board feet.

NAHB calculated these average home price increases based on the softwood lumber that goes into the average new home, as captured in the Builder Practices Survey conducted by Home Innovation Research Labs. Included is any softwood used in structural framing (including beams, joists, headers, rafters and trusses), sheathing, flooring and underlayment, interior wall and ceiling finishing, cabinets, doors, windows, roofing, siding, soffit and fascia, and exterior features such as garages, porches, decks, railing, fences and landscape walls.

The softwood products considered include lumber of various dimensions (including any that may be appearance grade or pressure treated for outdoor use), plywood, OSB, particleboard, fiberboard, shakes and shingles — in short, any of the products sold by U.S. sawmills and tracked on a weekly basis by Random Lengths.

For more information on the price increases, contact Paul Emrath.

To learn how NAHB is addressing the lumber crisis, visit nahb.org.

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  1. Artie says:

    There is no end in sight unless they drop the tariffs even then its just a start

  2. Tom Tamlyn says:

    But fiber cement for siding and soffit etc isn’t a pure wood product

    • David R says:

      Yes, but lumber is most visible right now, however entire construction industry is booming which reflects increased demand on all parts of a home. Copper wire seems to be up about 20% last few months for instance. 250 ft of l4/2 was 45 in december now $56. It’s a combination of stimulus inflation (weakening dollar), increased demand (also probably stimulus related), and supply chain issues (covid related).

      • jen says:

        You are right on the money.
        We didn’t qualify for any stimulus (over the cutoff), yet we are being pinched for it (we have kids in college, so not a lot of extra cash flow). I do know some who did get stimulus who are working on projects. Thank goodness for the low interest rates.

  3. Curtis Graf says:

    I’m curious when this will legitimately slow down demand. We have lots of clients who complain about the price increases, but so far no one has pulled the plug on their start. I sense it is coming though.

    • Darwin Tansey says:

      Housing starts were down 12% in January. I personally know of two multi million dollar projects that are currently postponed due to this.

  4. Ed Howard says:

    I know dimensional lumber is up a good bit but manufactured wood products have gone crazy. This article says everything done by lumberyards. But the truth is it’s the manufacturing that’s gouging more than the sawmills.

    • Peter Evans says:

      It is not up “a good bit”..that would be a 5% increase. It is up TWO HUNDRED PERCENT since this time last year.

  5. Ed Howard says:

    So if the price of an average house lumber increased $24,000 and the average value of the same home increased $9000, who’s going to pay for the $15,000 difference? The banks won’t loan it so it either comes out of the builders pocket or the homeowner has to shell it out.

    • Jtbuilder says:

      Cost of doing business. The market value of a home doesn’t have anything to do with the cost to build it.

      • David B. says:

        Cost of doing business…..how do you figure. Builder will end up footing none of it long term. Two types of houses. Those that are built in a subdivision all at one time by same builder and charges a flat sales price or ones that you pick and you buy the land where you pay the builder a flat fee. On the first scenario, he just increases his pricing on upcoming builds to make up for losses even if the lumber comes down. Bank won’t pay most or all of it because of your appraised value.
        Your home/your land/flat fee scenario, when you run out of money from draws, somehow or another, the owner has to come up with enough money to finish home. That is the scenario I am in. I am taking out a second line of credit to finish home. Either way, the future homeowner will shoulder the increase in both scenarios. Another thing a builder could do is to use cheaper products or eliminate things to offset some of that cost to new owners. That is what I am having my builder do as well as on my own. One example, I returned all of my new appliances and bought new returns/floor models. Saved at least $4,000 there. I am using mostly led can lights and bought my other lights from Costco. Saved at least $1,000 there. I ordered my cabinets that are almost just as nice as the custom from an outlet store. Saved $15,000 there. Those are just some examples. Overall, I have reduced my overage by over $25,000 so far. I keep track of every penny along the way. My goal is to cut cost, eliminate the middle man, and get no second loan or reduce it as much as possible. For most, every dollar you spend, you will pay interest on that dollar for 30 years. Don’t just look at now, look long term. On top of that, your overage will not make your house appraise or sell for more whenever that does happen.

        • Mark says:

          You are wise!

        • Carla García says:

          I bought a new house and we signed a contract on July 2020. They started the building process till November. By January the framers were done with the skeleton of the house. The house is supposed to be ready by April. On Friday the builder told us that the house price has to go up 10k because of this. I don’t know what to do because why are they barely telling me this if my house is already like At 70% I am trying to fight it but I dont know if it’s gonna be worth it

    • C Stiles says:

      One of those numbers is for an average single-family home, the other is for an average multi-family home.

    • David Richter says:

      It’s not “homeowner” it’s “homebuyer” and if they dont like increased price of home, they are free to not buy (which I personally am ok with). As builders, we can all try to do our part. Metal studs when possible, save good wood from demos, 24 on center framing?, frame with 2×3 instead of 2×4 (in basements). Every bit helps. Price won’t go down until demand does, unless supply increases.

  6. I have had clients that pulled the plug on homes due to this spike. I think prices as this are going to hurt if they don’t come down soon.

  7. Jim Thompson says:

    Logging in North Idaho has never been more robust. The stock pile of logs at the local mills has exceeded any previous totals and yet the loggers are making the same wages as before. Mills are reaping the benefits of the demand. It’s effectively pricing people out of the market and will eventually slow/stop the surge in new clients. Tariff removal is only part of a solution to dropping costs.

    • Well said Jim, the poor logger getting the same while the mills are killing it. It needs fixed sooner than later. Mills need to get back to full capacity or near it and quit playing the supply and demand game to increase their profits while the builders are struggling to stay above water.

    • Wonder are the prices of the logs that the Saw Mill buys going up? says:

      I Wonder are the prices of the logs that the Saw Mill buys going up?

      • Jay gee says:

        Sawmills in my area are currently paying less for logs than 1 year ago

      • jen says:

        So realistically, the costs at the mill are not going up, but the demand has increased the amount that the mills can sell for. It’s like bidding on ebay (for us regular guys to understand).

        • David Richter says:

          Correct bc mills are at capacity so only supply increase is coming from new mills coming online (which I have seen reports that this may happen soon)

          • jen says:

            I expect to buy my lumber package in April or May – I’m committed due to the bank loan. I pray that it comes down but at that point, who is to say the lumber yards won’t keep the price where it is because people are used to paying it.

  8. How can the writer not offer ANY analysis on why the prices have increased to this degree? IMO it is simply the work of tariffs and anti Canada actions by Trump. Reverse those anti competitive forces from the equation and tap into the forest abundance ( which is a renewable resource) and we all benefit. Of course the non competitive south east forest industry will not continue to grow because their land coats are simple too high. Therefore we need to let the market take its course and work to ameliorate the loss for them while not continuing to grow the bureaucracy and tariff wall mess.
    Mr Biden – Tear down this wall!

    • Nancy Graham says:

      Yes, a boon to stock market futures in lumber. The opportunists have cashed in on the chaos of Trump’s way of doing business to the detriment of the real US economy.

    • TradeExpert says:

      this appears to be true price gouging by the owners of the manufacturing companies and not related to tariffs. trucking companies all over the country have lost drivers to the construction industry.

  9. Darwin Tansey says:

    Housing starts were down 12% in January. I personally know of two multi million dollar projects that are currently postponed due to this.

    • jen says:

      Well, I can’t imagine how much that added. I have a project that’s closer to a half million and the bank says it’s about a 40k difference for cost basis vs built. I’m hoping the lowered demand this month helps, but if money is being thrown around by the gov’t, I don’t see how that will help.

  10. TJ smith says:

    I just started a house in November and paid $26 sheet for OSB. Had to buy 20 more last week and paid $43.

  11. Kris Yaun says:

    Sad part is thats just the lumber package..pipe…wire…rebar all have gone up as well. Now with new energy codes coming out your HVAC, windows, and insulation will be going up as well…most likely 5k to 6k a home. Then if you are building specs…tack on increased excise tax…increased real-estate fees. Yeah…not good!!!

  12. Kevin Kelly says:

    How about providing the impact on multifamily as well and as frequently !!!!!

    • NAHB Now says:

      The impact on multifamily homes is provided in the first paragraph as well: “Similarly, the market value of the average new multifamily home has increased by $8,998 over the same period due to the surge in lumber prices.”

      • Sjs says:

        That general statement makes no sense to me. The value on my home isn’t going up because of a temporary lumber price increase. My example is simple I’m on the west coast and in short order the price of rebar went from $400 to $1350 per bundle over a 10 month period because of the huge dam being built in China causing a shortage in metal. There was also a huge change in copper prices going up. I was in the middle of a large hillside retaining wall and foundation (350yds of concrete) for a residence. The homeowners value of my work didn’t change in the long run because a few years later the price was back to normal. The only thing that happened was I was forced to overpay and the owner got screwed because I use a contract with material cost increases included. The only reason I have a clause is because a lot of what I bid on has huge planning delays and it’s not uncommon to start and stop and I don’t want to be locked in 6months later if prices jump.

  13. Is anyone taking into account the high demand for materials and skyrocketing prices as being a result of the high rebuilding demand from the rather high rate of natural disasters both here and abroad?

    The latest events in Texas will consume an inordinate amount of materials thus lowering supply and increasing pressure on an already challenged supply chain. Add in wildfire damage in California, flooding and tornado damage in the Midwest, multiple hurricane damage in the South and continued recoveries in the Caribbean and materials demand exceeds production capacity.

    How much is the increase in pricing due to expanded logistics?

  14. Raymond says:

    I was expecting/hoping for a answer on why building materials are way up

  15. Ron Brown says:

    We are being taken advantage of because people want houses. Its price gouging period!! Is no one watching the lumber industry? Cost the building zero…it comes back to you and me. It’s wrong! Did trees suddenly go on strike?

  16. Brian says:

    Do we think prices will go down or continue going up?

  17. Bob Stumpf says:

    Steel studs, here we come!
    Alternative materials and ideas and it’s just a matter of time when the lumber mills can choke on their lumber.
    They can learn firsthand how well the Middle East has done with raising their oil prices now that Electric Vehicles are becoming the norm.
    The lumber mills will learn what the phrase, “Killing the goose that lays the golden eggs” means.
    All just a matter of time…

  18. Bob Stumpf says:

    Add to those alternative materials, 3D printed homes!!! Just this morning, 2/25/2021, on CNBC, Diane Olick had a special segment on these homes under construction in New Jersey. Plastic walls, if you will, poured on site! Think of it, lumber mills, no more knots, twisted and warped 2X4s, 2X6s. NO MORE TERMITES, no more nail pops, no more wasted cutoffs in the dumpster. KEEP JACKING UP YOUR PRICES, LUMBER MILLS! WRITE YOUR OWN OBITUARY!

  19. Laura says:

    Alternative building is the way to go. We are building a rammed earth house. Using the dirt that was excavated from our land. Anyone interested in learning more please feel free to contact us. This is the first build of this kind in the Atlantic provinces

  20. Bentley says:

    Home Buyer Perspective: I signed contract on new 3 bedroom house in north Texas n Jan 2021. As of today the builder is still getting Bids for home. We are afraid we the price will go up significantly. We where so excited creating our dream house. Empty Nesters creating something special. Like many who go thru this process, you really get attached to house and land. Well, this is a problem. When the builder quotes you at start of process and then the bids come back 25% higher, what do you do? I am afraid that I will not be able to afford this house once it is done in November of 2021. The price of lumber is up 25% since Jan 2021.
    It is at $1,075 (March 7th 2021). If it continues to go up like thi,, our little 3 bedroom house would cost like $1M in November 2021. The issue is, the home market is going crazy again, Some folks will go thru the purchase of these over priced homes, (even if appraisal is lower). Then they move in and cant afford the mortgage. Especially if same house built 6 months earlier sells $150,000 cheaper in one year out. The home prices go down and you are over your head in mortgage. THIS WILL HAPPEN AND THE BUBBLE WILL BREAK!!!!!!!!!!!!!!!!

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