Commerce Secretary Pledges Full Support of Biden Administration to Resolve Lumber Issue

This post was updated on May 29, 2021.Gina Raimondo testimony

Commerce Secretary Gina Raimondo acknowledged the depth of the lumber price crisis and its effects on the residential construction industry, home buyers and renters during a meeting today with the NAHB senior officer team.

“The residential construction industry is facing serious challenges because of supply chain constraints and the impact on home building, especially with respect to affordable housing. Today was a productive, positive conversation to begin to address these challenges,” Secretary Raimondo noted. “We take these issues seriously, and my staff and I are committed to continuing to work with all stakeholders, including reviewing relevant data and conducting analysis to identify targeted actions the government or industry can take to address supply chain constraints.”

Raimondo and NAHB CEO Jerry Howard discussed working together on convening a summit that would include representatives from the U.S. government, the lumber supply chain and the home building industry.

“Commerce Secretary Raimondo understands that high lumber costs are adding tens of thousands of dollars to the price of a new home,” said NAHB Chairman Chuck Fowke. “She heard our stories and acknowledged that she is concerned – and that President Biden is concerned – about the effect of the lumber price problem on the broader economy.”

“There is a disconnect between lumber supply and housing demand,” said NAHB First Vice Chairman Jerry Konter. “U.S. sawmill output increased 3.3 percent in 2020. But over the same period, single-family construction increased 12 percent to almost 1 million housing starts, and the remodeling market expanded 7 percent. We feel this mismatch between domestic production and rising demand for building materials is at the root of the unsustainable increases in lumber prices.”

Current prices according to the Random Lengths Framing Lumber Composite Index – the industry benchmark – have more than quadrupled since April 2020 to more than $1,500 per thousand board feet. Lumber prices alone are adding nearly $36,000 to the price of a new home, pricing millions of middle-class households out of the market at a level they previously could afford, NAHB analysis shows.

Identifying the Solutions and Addressing Housing Affordability

Looking at domestic timber, NAHB Second Vice Chair Alicia Huey pointed out the decline in the domestic harvest, noting that as recently as the mid-1990s, roughly 10 billion board feet of lumber was harvested from the nation’s forests each year. Over the last 10 years, the harvest has fallen below 3 billion board feet most years. Huey asked the secretary to advocate for better, more active forest management goals from U.S. national forests to help ease the current shortage.

NAHB Third Vice Chairman Carl Harris encouraged the secretary to push for a lasting softwood lumber agreement with Canada. “We need trade policy that actually serves the interests of the American people and increases housing opportunity for first-generation home buyers,” he said.

The effect of high lumber prices on low- and moderate-income families is a top concern of NAHB and the Biden administration, noted NAHB Immediate Past Chairman Greg Ugalde.

“My company works with many first-time, first-generation home buyers,” said Ugalde. “After all these lumber costs get added to the price of a home, those first-time home buyers are often the first to be eliminated from the market.”

Ugalde also acknowledged Raimondo’s long-standing commitment to the housing industry. “We met with you when I was NAHB chairman and you were the governor of Rhode Island, and we saw that you were a person of action when it came to housing affordability. We need your help again to protect first-generation home buyers.”

Raimondo noted that NAHB proposed tangible ideas for moving forward on the lumber problem, including better forest management, increased production from the nation’s sawmills, and working toward a more lasting agreement with Canada.

“I want to thank the NAHB and its leaders for constructive engagement on this issue and working with us to find a path forward,” Raimondo said.

For more information about how NAHB is addressing the lumber crisis, visit nahb.org.

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  1. Bob says:

    Open up more lumber from Canada and a summit would be a waste of time and money

  2. stanley feck says:

    Finally a discussion that actually addresses the real issues causing Lumber price crisis “Domestic Production”
    The government by mandate should order all agencies within 60 days to submit proposed resolutions to be reviewed and approved within the following 60 days

  3. The Biden admin has it a bit wrong. The sole reason for the lumber crisis is overwhelming pent up demand from the shutdown while reality shows Lumber mills are faced with more orders than they can fulfill.

    This results in the classic supply and demand principle of a capitalist nation, get what you can, when you can.

    While this principle has traditionally supported our free market environment, and given that the stump price of timber has not significantly moved upward in the past 5 years, the only thing left is simple capitalistic free market opportunity to raise prices until the market says NO MORE.

    The Lumber mills are simply taking advantage of overwhelming demand and limited supply . If anything our entrepreneurial capitalism and highly successful economy has taught us, it is simply to raise your price until people stop buying. Any homebuilder with any experience can attest to this reliable axiom.

    The issue we have here is simply that we have NEVER been in this condition before, and therefore the mills are “making hay” while they can. You and I would do the same given their position.

    The unintended consequence is this astronomical cost increase is drafting all other home building suppliers to the the same simple conclusion: – keep raising prices until demand slacks off.

    This self imposed condition is creating an unprecedented market condition, which is a pre-loaded pipeline of pre-pandemic demand, amplified by the lengthy pandemic period, further unabated demand, then resulting in the insane low interest rate market for new homes that we are all now experiencing.

    The victims and damage to our industry are the losers in this twilight zone of our economy. Without governmental mandates on price controls, we may fall into an unrecoverable abyss of inflation which of course is unsustainable, and the resulting recession will make 1928 look like a picnic.

    The Biden administration must act NOW and simply require the Lumber MIlls and other supply chain players to immediately lower prices by at least 100% , and then keep lowering them until they reach the very healthy pre- pandemic levels where they all made money and kept our homebuilding economy on track for most buyers. . This is cautiously given with the condition that the Biden administration immediately cease the federal unemployment benefits which are clearly keeping much of the critical workforce out of the market for a job.

    In the meantime, lets PRAY……

    Steve Gronow, Director, Livingston County Association of Home Builders.

    Please give me the honor of your feedback – 810-599-5147, or steve@chestnutdev.com.

    .

  4. Tom says:

    President Biden has said he wants to revive the American manufacturing sector. He can start with the domestic lumber industry.

  5. Janet says:

    Invoke the Defense Production Act and/or open Canada, now.

  6. Andrew Collins says:

    Lumber and panel production have matched demand for the last decade. Don’t expect production to increase in the US on the turn of a dime because of a spike in demand. Corporate tax policy makes it virtually impossible to reinvest in existing mills, never mind trying to break ground on a new mill. Tax policy continues to force manufacturing overseas and lumber and panel markets are a perfect example of this.

  7. Shane Harris says:

    I do not see the shortage. As a homebuilder, everytime I call the lumber yard to place an order the material is there by the next morning. It has been this way through the entire pandemic. I do not believe there is a shortage. I also see the logging and timber companies working just as I always have and have spoken to them and they admit they are not making any more money than before. The big guys at the top are getting richer and why would we expect anything different. Capitalism is not taking advantage of a bad situation it is taking advantage of a good situation. At the same time this administration is okay with all of this because it makes the coorperations look bad and gives them a foot in the door. There is absolutley no reason why a 2x6x105 should cost $24.00!!! This is gouging and these people should be held accountable.

    • Mark Worley says:

      You praise capitalism and then want to punish the system. Good thought, just can’t have it both ways. I think we should take a break on purchases and see what effect demand ,or lack of demand has onnsupply.

  8. Is the US selling lumber to China and/or other countries? If so, it must stop immediately.

  9. Kenneth says:

    This is the biggest threat to uncontrolled inflation that the nation faces at this point. As usual the lower and middle class are hurt the most. The government must intervene or we will face the consequences of their inaction

  10. S. Robert August says:

    Fabulous NAHB direction and action!
    Wonderful leadership quotes!
    Excellent member points!
    Share this information with your political leaders!
    Get involved locally, statewide, and nationally through our federation today!
    ONwards and UPwards with positive and productive resolutions to this important lumber issue!
    United we stand. Divided we fall.

  11. Jeff Hirschberger says:

    The fact that Tariff on Canadian Lumber is still in effect is crazy. The suppliers are taking advantage of all of us
    and do not deserve any protection. The importation of plywood from other sources???? , will bring down $$$.
    If we are to have a true free market system– IT MUST BE FREE FOR ALL– not only the large donors.

  12. Steve Gronow says:

    Dear Joe – eliminate all tariffs immediately, set aside all the environmental red tape for permits to open new production capacity, allow a one time tax break for the new investments. Made by all supply chain participants, and give home builders a 50% tax credit for payroll and training of apprenticeship.

    Do this and we will be well out of our pain by the end of the year. Perhaps at that time we may develop plan B to enable affordable housing to finally become a reality. This will start with overhauling “ Home Rule “ .

    Lets form a small task force to outline the new zoning and permitting process requirements, and create a fast track to final site plan. We can start by reducing the number of meetings by half. Combine planning commission and board into one process, not 2.

    Steve Gronow 810-599-5147

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