How Rising Lumber Prices Impact More Than Just Home Builders

lumber prices impacting housing affordability for families

As lumber prices continue to soar, the cost is to build homes is rising with it and pricing many prospective home owners out of the market. The average price of a single-family home has risen more than $24,000, and many clients are having to walk away because they can’t afford the increase. This fast price escalation is having far-reaching consequences throughout the industry, and prohibiting home builders and partner organizations from providing much-needed housing to families across the country.

“Our tri-county service area has experienced a 55% decrease in home construction over the past two decades, despite our population growing by 5% each year,” observed Morgan Pfaff, executive director of Habitat for Humanity of Wisconsin River Area. “House prices have also grown 24% faster than wages in that same time frame, creating a serious housing shortage that most deeply impacts lower-income working families, but also harms local industry due to a growing inability to attract and retain a skilled workforce.”

“The rising price of lumber and scarcity of building materials has had a significant impact on our ability to address the housing crisis,” she added. “A home that was built in 2018 cost $11,300 to raise the walls; those same walls cost $17,074 two years later. This is a 66% increase, and will only further restrict our ability to provide safe, decent and affordable housing in our communities.”

Many Habitat for Humanity chapters are experiencing similar setbacks, not only in constructing homes, but providing critical repairs for the families who own these homes.

“Our Habitat affiliate is the only agency completing major repairs — roofs, furnace and septic system replacements — and installing wheelchair ramps in our service area,” shared Nancy Pellegrini, executive director of Habitat for Humanity Menominee River in Michigan. “We serve families that are at or below 60% area median income. Since the price increase of lumber, we have not been able to complete as many critical repairs as usual. We have also had numerous customers decline repairs due to the cost of materials.”

As nonprofits, Habitat for Humanity affiliates are doing their best to help bridge the gap through fundraising and additional financing.

“Luckily, we were able to access additional financing and a very generous gift in kind or we may have had to forego another year of home construction because of rising lumber prices, having already lost a year due to COVID shutdowns,” noted Virginia Ohler, executive director of West Tuality Habitat for Humanity in Oregon.

This is not a sustainable solution in the long run, however.

“Having to pay an additional $10,000 to $15,000 for material would price the families we are serving out of the market,” stated David Schreiber, construction manager for Stephens County Habitat for Humanity in Georgia. “The only solution is to raise additional money and gift the family anything over what they can afford, which is not a good solution because fundraising is difficult enough without having to explain some dollars would be gifted. We need donated material or subsidized material to continue our mission.”

Other Organizations Also Feel the Impact

“The price increases for lumber products are a main contributor to increasing the costs to build a home,” noted David Frandsen, owner-builder program manager for Utah-based Neighborhood Housing Solutions, a nonprofit organization that focuses on helping local individuals and families find a pathway to affordable housing. “There are people that we can no longer help to get into a home because the costs of materials (especially lumber) continue to increase at unsustainable rates.”

Workforce development programs also are struggling.

“We have a limited budget to purchase on our student projects,” shared Michael Schaffer, a building construction teacher in Illinois. “The high cost of lumber is limiting the projects and training that students need in order to become successful within the high-demand construction industry. We are completely over our school budget for our highly skilled building construction courses.”

Workforce development has been one of the biggest opportunities to combat housing affordability, even before the COVID-19 pandemic, as the industry struggles to bridge a gap in labor shortage. Impeding training for much-needed workers because of lack of supplies could have long-term impacts.

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 (23)

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  1. Robin Ward says:

    I an working for a Lumber Company that also sells millwork and hardware that has been in business for 125 years, In the 50 (fifty) years that I have worked for that company, I have NEVER seen the price increases on lumber that I have seen this past year. I have seen the shortages and or allocations, but not the increase. And I don’t know what to say to the contractor or to the homeowner accept, that I am sorry, And mills are shutting down because of lack of help, because of fires or natural disasters, and Tariffs that are imposed on us. And I think people are now realizing the domino effect that this has on the whole economy of the nation.

    • Mario Di Gioia says:

      I have been in the building business for 35 years. And I have never seen anything this bad.
      Call it what you want, shortage, mills closing, covid19. But the bottom line is that someone is profiting from this, and making a lot of money, and it is not Kool. I feel like I am being robbed.
      We cant even ask the clients to pay for this, they wont, and they cant afford to pay for the rising costs of lumber and material. Not to mention the homes do not appraise due to the increases. We are being forced out of business due to greed. That’s what it is GREED! How can anyone take advantage of peoples livelihood is beyond my comprehension.
      I hope the HBA can do something about this.

      • Amend brother. I feel your pain. It’s ridiculous what we have to pay for Materials. These big companies probably also got the Pay Check Protection money to pay there employees. So they making ridiculous amount of money

  2. Charles Prewitt says:

    My sister,63, has wanted a new home forever. She has retired, ready to build, now covid and greed driven higher lumber prices have put that on hold. Even though site is cleared, foundation slab is poured with all underground work installed. What is a body to do? Wait to see if prices go up or down. Pray that the government will step in and remove import tariffs thus driving down domestic lumber or just scrap the idea for now and wait? Need help.

  3. Steve Young says:

    Lumber is figured and sold by the board foot but now the mills are only paying loggers by the ton. Seems like there is some artificial price increases going on here rather than just labor or tree shortage which has been the reported cause. Maybe some deeper investigation needs to be done here.

    • Andrew Fread says:

      I agree, the jump in 1/2 ” sheathing wether obs or plywood is insanity..add that with the quickly rising gas prices and more and more small contractors will soon be looking for new careers

    • there is no tree shortage in my area of South Carolina. until we have locally owned mills as oppose to foreign owned we are going to have a problem.

  4. Scott Lewis says:

    I have been in the General contracting business for 35 years and have never seen the Blatant price gouging that we are seeing today. In Peoria IL we are seeing 100 – 145% price increases. It feels like the mills are using the Covid excuse to shut mills down and create lack of materials sending prices completely out of reach. As the general contractor that sits across from the consumer and try to explain why the material cost is pushing there dream home out of reach is very frustrating. I would like to see our legislators step in and stop this insanity. The lumber is available the demand is rising and the mill producers are shutting things down in efforts to raise cost. We need to all work together to get the supply out to meet the demand. PLEASE HELP!

  5. Mack Hall says:

    They’re just going to have to put the people back to work and not have the unemployment this free money is letting these people stay home they’re not looking for work until they get hungry they won’t go back to work until this unemployment has stopped until then all the builder supply places continue to rise their prices as they run out I guess Congress needs to step in and put a cap limit on the price of materials I’ve been a contractor for 40 years I have never seen it this bad the only way I can price a job is go ahead and pay for the materials that day that’s how fast it is climbing ridiculous someone is gouging in the market

  6. Robert Williams says:

    I think it has something to do with the tariff that TRUMP put on Canada

  7. Over 45 years building homes I have never seen the increase as bad as this .Since the late 90’s I have build starter homes. A home i built in 2000 for $88,900.00 mow cost $178900.00 even with low interest rates this home has eliminated many from owning a home.

  8. Conway Andersen says:

    Lots of reasons for the high lumber prices: huge federal stimulus money, many getting too much PPP money they did not need, lower tax rates on wealthy, Fed holding interest rates too low for too long, fires, Covid causing move from cities to suburbs, unemployed workers making more money being unemployed, tariffs on Canadian lumber, greed. These ultra high housing prices will not last if 30 year mortgage rates get back to about 4.5% to 5.0% increasing monthly payments by 25%+. Many borrowers will be priced out before then. Another government housing crisis.

  9. Chris Allen says:

    I am the Construction Director for Livingston County Habitat for Humanity in MI. We built a Home for a partner family during covid. The additional cost of materials raised the build price by around twenty thousand dollars. This money could have gone to our Critical Home repair program called Brush with Kindness. That much money going in to the home build limits our ability to do more in the community.
    As a goal we always try to do more with less and the way it’s working out these days, we have to do less with more. It breaks my heart to think of all the good things that could have been done with the additional money.

  10. We are a small Design/Build business and have been in business for 34 years in the Capital Region of upstate New York. Just prior to the outset of the pandemic we had signed contracts for 2 homes to be built. In short what we had budgeted based on “normal” lumber pricing at the beginning of 2020 and what we ultimately paid for lumber, floor systems, trusses, interior trim, interior doors and other lumber related items blew our budget out of the water and sunk our profits. On 2 homes which were only 2400 and 2600 s.f. the rise of lumber and lumber related items put us $29,205 and $31,420 OVER BUDGET cutting into our Profit by 65% – and that’s before taxes! At that rate – it’s not worth building.
    After experiencing that, we incorporated in our contract a clause which basically stated that the price of the home will be based on the lumber prices as of the date we sign the agreement. Upon actual purchase of lumber or any lumber related items we will provide copies of the invoices along with a report showing the client the actual cost of the material. If the delivered cost was higher, based on lumber costs they will pay us the difference. If the delivered cost was lower, we would credit the client the difference. We can’t be more transparent or fair than that! Unfortunately, the reaction you get from most perspective clients is “I can’t afford to take that risk!” Well guess what folks, neither can we! And then you get those that are reluctant to sign but say they will – if you wait until the price of lumber comes down to purchase. Can’t operate on a stop and go system when building and make any money.
    That all being said, the really unfortunate part is we are getting notices weekly now of all other material costs either rising up or expected to rise just prior to the Spring building season. Whether legitimate or not – I don’t know. Part of me sees that manufactures and suppliers see builders willing to swallow lumber rising as much as 200% and still willing to pay – so the other manufacturers and suppliers figure why not get in on the action and crank our prices up as well.
    The whole situation needs to be brought under control. I understand that no one expected the demand for lumber during the pandemic when mills were scaled back and production and supply was low – but let’s face it – that time has passed for manufactures and suppliers to keep using the pandemic for an excuse for non-performance and non-production.
    Furthermore, I believe that Biden’s cancelling of the pipeline probably pissed off Canada creating huge losses in jobs, oil and gas exporting and as a result, prices and tariffs on lumber will be used to make up for part of those losses of the pipeline shutdown.
    We need some help here, not just for us, but for our employees, subcontractors, their livelihoods and their families to survive. If this problem is not seriously and quickly addressed, you will see the largest industry and consequently the largest employer in this country destroyed along with many lives and this country better be prepared for another drastic recession.

  11. Dan Foley says:

    Hi Andrew. I have been looking now for over a year. I closed my doors after 20 years of ownership.

  12. Barbara McCullion says:

    My husband and I are 59 years old and have waited 34 years to build our home. We started last May and we are sitting on a home that has not even been completely closed in due to the lack of building materials… Not to
    mention we experienced a 25% price increase between the quote and delivery of material! We now will have
    to go into our retirement fund (which wasn’t great to begin with having put 3 children through college). At the end of the day I have no idea whether we will be able to finish our retirement home. This has been so stressful and has reduced me to tears. Something needs to give and not our pockets!

  13. Tricia B. says:

    Well if lumber was the ONLY problem, but it’s not. We just got the price estimate from our builder on our 3875 sq ft dream retirement home on our dream 12-acre property. It came in $188,000 over what he thought due to lumber, PVC, electrical wiring, and other increases. After doing a quick internet search I found the following. I haven’t searched for glass, windows, tile, appliances. I imagine the same story would be repeated. I am hoping that this will calm down in 2022 and we’re willing to wait and see, but if it doesn’t we’ll have to find another option, I’m just not ready to give up on the dream. I guess our silver lining is that this 12-acre plot of land is now very valuable.

    PVC – PVC prices went up three times in two months as a result of “a very tight market, a robust increase in demand from construction, significantly higher export prices, much lower availability, and the late-settling September ethylene contract price increase,” which only added to PVC production costs, according to Mark Kallman, RTi’s VP of PVC and Engineering Resins. (from January 2021)

    Electrical wiring – Recently, one of the largest North American based wire and cable manufacturers indicated that their insulating and jacketing materials have recently increased in cost by between 10-25% depending on the compound and will be implementing broad-based price increases in the Spring of 2021. (from February 2021)

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