Skyrocketing Lumber Prices Add Nearly $36,000 to the Price of a New Home

This post was updated on April 30.

Soaring lumber prices that have tripled over the past 12 months has caused the price of an average new single-family home to increase by $35,872, according to new analysis by the NAHB Economics team. This lumber price hike has also added nearly $13,000 to the market value of an average new multifamily home, which translates into households paying $119 a month more to rent a new apartment. Further adding to affordability woes, building material prices have by and large been steadily rising since 2020 and were up across the board in March.

The latest Random Lengths prices as of the week ending on April 23 show the price of framing lumber near $1,200 per thousand board feet — up nearly 250% 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.

Why Lumber Prices Have Surged

These unprecedented lumber price hikes are attributable to the following factors:

  • Many mills reduced production last spring due to stay-at-home orders and social distancing measures enacted by state and local governments at the onset of the coronavirus pandemic.
  • When it became clear in the ensuing months that housing weathered the storm much better than predicted and demand remained strong, lumber mills did not ramp up production accordingly. 
  • Moreover, producers did not anticipate the massive uptick in demand from do-it-yourselfers and big box retailers during the pandemic. 
  • Finally, the extreme lumber price volatility has been exacerbated by tariffs on Canadian lumber imports into the U.S. market.

NAHB Actions

As lumber prices remain stubbornly high, NAHB continues to work relentlessly with the White House, Congress and lumber producers to increase production and bring prices lower. This is the top priority for the association. Since President Biden was sworn into office in January and the new 117th Congress was seated, NAHB has taken the following actions:

  • At the same time, we continue to reach out to lumber producers, other policymakers and the media calling on lumber mills to increase production to meet growing housing demand.
  • On the last point, NAHB has saturated the media with our message on the need to act on soaring lumber prices and how it is hurting home buyers, home builders, the housing industry and the economy. NAHB CEO Jerry Howard delivered this message in an April 22 appearance on Fox Business, Cavuto: Coast-to-Coast. The same day NAHB Chief Economist Robert Dietz discussed rising material prices on NPR Marketplace.
  • Additionally, Fortune, Bloomberg, The Washington Post, The Wall Street Journal, Fox Business online and the Associated Press have mentioned or quoted NAHB on the impact of rising lumber prices. Woodworking Network on April 30 published a sharp by rebuttal by NAHB that undercuts arguments from the U.S. Lumber Coalition on lumber prices and import duties.
  • NAHB is also seeking swift action on the trade front. Tariffs on Canadian lumber shipments into the U.S. are exacerbating price volatility and increasing housing costs.
  • In the near term, NAHB invites builders to take advantage of this free sample escalation clause to use in contracts which stipulates that if lumber prices increase by a certain percentage, the customer would be required to pay the extra cost. 

The NAHB advocacy team – Government Affairs, Communications, Economics and Legal – continues to work doggedly on all fronts to find solutions that will ensure a lasting and stable supply of lumber for the home building industry at a competitive price.

NAHB Senior Economist Paul Emrath provides more analysis on how rising lumber prices have added nearly $36,000  to the price of a new home in this Eye on Housing blog post. Future analysis from NAHB will also examine additional factors, including other building material costs.

Learn more about what NAHB is doing to resolve the lumber crisis at nahb.org.

Tags: ,

Comments (23)

Trackback URL | Comments RSS Feed

  1. Jay says:

    Thank you for your dedicated work on this issue.

  2. Robert says:

    Its nice to see people trying to help the people of this nation instead of everyone else

  3. Bobby says:

    Don’t forget the lumber mills are making record profits. That gets left out of all these articles. Supply vs Demand.

    • Mike says:

      Also missing from the article is that our nation’s largest home builders are also reporting record profits, while also reporting record sales. Lumber prices are not coming down until demand subsides.

      I would encourage extreme caution when wanting more government intervention into lumber pricing. If they think that they can influence affordability through manipulation of material prices, how long before they dictate what builders can sell a home for? I believe that this is a very slippery slope.

      I am passionate about affordable housing, but believe that we need to address it via reduced regulation, and an increased labor force. There are better ways than asking our government to manipulate the game in our favor. This may result in a short term gain, but I believe a long term consequence.

  4. We are a custom home builder in Florida. Like everyone else, we are struggling with rising lumber and material prices, as well as material shortages and delays.

    Has anyone had any success with an escalation clause in their construction contracts, or a contingency amount set aside for future price increases once a contract has been signed? Or any other method to protect a builder?

    The only type of contract we have experience with that protects us as a builder is a “cost plus” contract. However, most buyers are not comfortable with that. Some banks don’t want to see a cost plus contract, unless the buyer has a certain amount of reserve funds.

    If anyone can respond to this with methods they are using in their construction agreements, I would highly appreciate it. Thanks.

    Chuck

    • Chuck – I am a custom home builder in the Saratoga County Area of New York and we implemented a “Material Volatility Clause” which basically states that the benchmark cost of the Lumber and related materials i.e. trusses, engineered floor systems, trim, doors, windows etc. are all based on the date we presented the client with the price of the home. If the cost we incur at the time we purchase the material is higher – the client will reimburse us the difference. In fairness, if the cost is lower – we will credit the difference back to the client. We can’t be more fair than that! We will upon request produce invoices to justify the adjustment. It’s getting to the point now where we may have to revise that and include any petroleum based products as well such as roofing, asphalt etc. Best of luck. Chris Semenza

    • Tim says:

      Hi Chuck,

      We have a 10% clause that states “In the event of significant delay or price increase of materials occurring during the performance of the contract through no fought of the Contractor, the contract sum, time of performance, and contract requirements shall be equitably adjusted by change order in accordance with procedures of the contract documents. A change in price of an item of material shall be considered significant when the price of an item increases 10% between date of contract and date of installation”

  5. Jay says:

    Thank goodness we switched to Cost-Plus contracts for our custom home business a few years ago. Clients understand- especially today- when it is explained to them up front. We’ve had very little push back.

  6. Thomas Jones says:

    Why did NAHB wait so long to take action on lumber prices. It appears you were scared of the last administration who put tariffs in place and botched the pandemic which has led to today’s situation.

    • NAHB Now says:

      On the contrary, when prices began their historic rise last summer, NAHB reached out extensively to the Trump Administration over several months, asking the White House to call on domestic lumber producers to ramp up production to ease growing shortages and to make it a priority to work with Canada on a new softwood lumber agreement that would end tariffs on Canadian lumber shipments into the United States. NAHB also met with the National Economic Council last August and Commerce Secretary Wilbur Ross last September. We also asked Congress to request the Trump Administration to act on this issue. Our efforts continued with the change of administrations and new Congress in January. You can learn more about NAHB efforts at nahb.org/lumber.

  7. maybe this would be a good time to not build this year. if that seems ridiculous maybe it isn’t. why take the risk for the declining margins.

  8. David says:

    I am curious about the supply side of the equation. I understand the timber growers/harvesters are getting near bottom dollar for their stumpage. Are there enough lumber mills in the country? Are they all running at capacity? Has the industry capacity been reduced in the last 10/20/30 years due to environmental or regulatory constraints?

Leave a Reply

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