Latest Wave of Rising Lumber Prices Adds More than $18,600 to the Price of a New Home

Filed in Advocacy, Housing Affordability, Material Costs by on January 4, 2022 61 Comments

Following a few months of moderating prices last spring and summer, lumber prices are soaring once again, disrupting the housing market and harming housing affordability.

Over the past four months, lumber prices have nearly tripled, causing the price of an average new single-family home to increase by more than $18,600, according to NAHB standard estimates of lumber used to build the average home. This lumber price hike has also added nearly $7,300 to the market value of the average new multifamily home, which translates into households paying $67 a month more to rent a new apartment.

According to Random Lengths, as of Dec. 29, the price of framing lumber topped $1,000 per thousand board feet — a 167% increase since late August.

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

The unprecedented price volatility in the lumber market dates back to April 2020 when the COVID-19 pandemic took hold and sawmills curtailed production in anticipation of reduced demand. 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.

The slow reaction by sawmills, combined with massive uptick in demand from do-it-yourselfers and big box retailers during the pandemic resulted in lumber prices peaking at a record-shattering $1,500 per thousand board feet in May 2021, before beginning a gradual decline through late August.

This most recent lumber price upsurge is due to a number of factors, including:

  • Ongoing supply chain disruptions
  • A doubling of tariffs on Canadian lumber imports into the U.S. market that increased price volatility
  • An unusually strong summer wildfire season in the western United States and British Columbia

NAHB Actions

As lumber prices remain stubbornly high, NAHB continues to work relentlessly with the White House, Congress and lumber producers to resolve lumber and other building material supply chain disruptions, increase lumber production and bring material prices lower. This is the top priority for the association. Over the past several weeks, NAHB has taken the following actions:

  • At the behest of NAHB, 84 members of Congress sent a joint letter to Commerce Secretary Gina Raimondo in late December expressing urgent concern regarding the Commerce Department’s recent decision to double tariffs on softwood lumber products from Canada. The letter also calls on the United States to resume talks with Canada to negotiate a new softwood lumber trade agreement.
  • In early December, NAHB leaders met with top Canadian officials at the Canadian embassy in Washington to discuss key softwood lumber issues, including the urgent need to restart negotiations on a new softwood lumber agreement that would end tariffs.
  • NAHB sent a letter to President Biden on Dec. 3 calling on the White House to combat high lumber prices by engaging with Canada on a new softwood lumber agreement and increasing domestic lumber production.
  • Through BuilderLink, NAHB engaged its grassroots over the holiday season by having our members call or write their members of Congress and urge their lawmakers to tell President Biden to negotiate an updated softwood lumber agreement with Canada and increase U.S. lumber production by harvesting more timber from U.S. forest lands.
  • With NAHB stressing that historically high lumber prices and building material prices continue to serve as headwinds to the U.S. housing sector, Sens. Jeanne Shaheen (D-N.H.) and Jerry Moran (R-Kan.) sent a letter to Commerce Secretary Gina Raimondo in late November to oppose the Commerce action to double tariffs on Canadian lumber imports into the United States.
  • NAHB Chairman Chuck Fowke testified before Congress on Oct. 20 and called on lawmakers to uncork supply chain bottlenecks that are exacerbating the housing affordability crisis.
  • NAHB sent a letter to Biden on Oct. 6 calling on the administration to take action on lumber and building material supply chain bottlenecks that are raising construction costs and harming housing affordability.

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

Learn more about what NAHB is doing on this critical issue at nahb.org.

Tags: , ,

Comments (61)

Trackback URL | Comments RSS Feed

Sites That Link to this Post

  1. Rise in Mortgage Rates Kicks Off 2022 - theMReport.com | January 6, 2022
  2. Jan. 8: Vendor news runs the gamut; letter on youth in lending & tips for lenders; Saturday Spotlight: Homespire Mortgage - Lender News | January 8, 2022
  3. Jump in Rates Shutting Out Refi-Seekers - theMReport.com | January 12, 2022
  4. Mortgage Rates Take Giant Step to Kick Off New Year - theMReport.com | January 13, 2022
  5. Lumber Prices Nearly Triple Going Into 2022 | Furnishly | Curated Home Goods & Decor | January 14, 2022
  6. Lumber Prices Nearly Triple Going Into 2022 - mraffiliate24 | January 14, 2022
  7. Lumber Prices Nearly Triple Going Into 2022 – Top Snapdeal | January 14, 2022
  8. Lumber Costs Almost Triple Going Into 2022 | Think a better life | January 14, 2022
  9. Lumber Costs Just about Triple Going Into 2022 | Inspiredcoolroom | January 15, 2022
  10. Supply chain issues could affect rebuilding after Marshall Fire – Supply Chain Council of European Union | Scceu.org | January 15, 2022
  11. Supply chain issues could impact rebuilding after Marshall Fire – Dinestle NY News | January 16, 2022
  12. Supply chain issues could impact rebuilding after Marshall Fire – Winestle Tech News | January 16, 2022
  13. Supply chain issues could impact rebuilding after Marshall Fire – Dinestle AU News | January 16, 2022
  14. Supply chain issues could impact rebuilding after Marshall Fire – Winestle Australia News | January 16, 2022
  15. Supply chain issues could impact rebuilding after Marshall Fire – JENI MEDIA | January 16, 2022
  16. Supply chain issues could impact rebuilding after Marshall Fire – Winestle Africa News | January 16, 2022
  17. Supply chain issues could impact rebuilding after Marshall Fire – Dinestle National News | January 16, 2022
  18. Supply chain issues could impact rebuilding after Marshall Fire – Winestle AU News | January 16, 2022
  19. Supply chain issues could impact rebuilding after Marshall Fire – Winestle Asia News | January 16, 2022
  20. Supply chain issues could impact rebuilding after Marshall Fire – Winestle US News | January 16, 2022
  21. Supply chain issues could impact rebuilding after Marshall Fire – Dinestle Mashable News | January 16, 2022
  22. Supply chain issues could impact rebuilding after Marshall Fire – Winestle America News | January 16, 2022
  23. Supply chain issues could impact rebuilding after Marshall Fire – Dinestle Australia News | January 16, 2022
  24. Supply chain issues could impact rebuilding after Marshall Fire – Winestle Express News | January 16, 2022
  25. Supply chain issues could impact rebuilding after Marshall Fire – Dinestle Yahoo News | January 16, 2022
  26. Supply chain issues could impact rebuilding after Marshall Fire – Dinestle America News | January 16, 2022
  27. Supply chain issues could impact rebuilding after Marshall Fire – Dinestle Wired News | January 16, 2022
  28. Supply chain issues could impact rebuilding after Marshall Fire – Winestle 9News | January 16, 2022
  29. Supply chain issues could impact rebuilding after Marshall Fire – Winestle USA Today News | January 16, 2022
  30. Supply chain issues could impact rebuilding after Marshall Fire – Winestle Daily Telegraph News | January 16, 2022
  31. Supply chain issues could impact rebuilding after Marshall Fire – Winestle NY News | January 16, 2022
  32. Supply chain issues could impact rebuilding after Marshall Fire – Dinestle US News | January 16, 2022
  33. Supply chain issues could impact rebuilding after Marshall Fire – Winestle WS News | January 16, 2022
  34. Supply chain issues could impact rebuilding after Marshall Fire – Dinestle USAToday News | January 16, 2022
  35. Lumber Prices Nearly Triple Going Into 2022 – Joyinformation | January 16, 2022
  36. Supply chain issues could impact rebuilding after Marshall Fire – Winestle News USA | January 16, 2022
  37. Supply chain issues could impact rebuilding after Marshall Fire – Dinestle USA News | January 16, 2022
  38. Credit Supply Increases Nationwide in December - theMReport.com | January 17, 2022
  39. Mortgage Rates Climb for the Second Consecutive Week - theMReport.com | January 20, 2022
  40. Flatbed Report: Cold snap brings seasonality back to markets – Etrust Business Finance | January 22, 2022
  41. Wheelchair 101: What Is the Average Cost of a Wheelchair Ramp? | January 22, 2022
  42. How the Lumber Industry Can Overcome Supply Chain Issues - Continental Underwriters, Inc. | January 25, 2022
  1. I have totally lost faith in the leadership of this country. To take the action it did when they raised the terrif on Canadian lumber shows how out of touch the Biden administration is. They preach the need for more affordable housing but have done nothing to support that goal. With every aspect of our industry increasing the cost of goods and labor every month, we have no idea what a home will cost by the end of construction. This is addition to the increased time home construction is taking. It would be great if our industry could shut down across the country and show the government how important we are to the economy. In the 30 years I have been building homes I have never seen anything close to these conditions.

    • Mr. Nanula,
      There was a time during the Carter Administration that interest rates topped 21%. Now that is a building buster if ever there was one. This lumber increase will pass as supply chain issues resolve.
      The key to the future is for everyone to get vaccinated so we can rid ourselves of the Covid virus. We did it in 1918 with only masks! Until then we will loose manpower in all sectors and supply will suffer as a result. Low supply, high price. If you like capitalism that is how it works.
      Leland Hussey

      • Barry Ezerski says:

        We can not do anything about the virus. Most of the people I know who have had the virus in recent weeks have been boosted so being vaccinated doesn’t stop you from getting it, it may help mitigate symptoms, but doesn’t stop it so we need to concentrate on things the administration CAN do. The number one thing it can do right now to help this situation is deal with the Canadian government on tariffs.

      • John L says:

        Leland, that is all true…except you neglected to mention the doubling of Canadian tariffs. The supply from Canada would help the cause. Doubling that tariff is a step in the wrong direction for this administration and at this time.

    • Ray S. says:

      Absolutely spot on. I’ve been in this industry for 38 years and this is unprecedented. Prices are going up every day and now the sad joke amongst suppliers and subcontractors has become that prices are only good until I hang up the phone.

  2. Brett Billings says:

    Another big factor not mentioned here is the “I” word…..surging INFLATION!

  3. David W Orr says:

    Article is mostly informative, except what did NAHB consider was an ‘average new single-family home’? What was the square footage of this ‘average’ sized home?

    • NAHB Now says:

      The average single-family home the NAHB economics team used in its calculation is from the 2018 Builder Practices Survey report, which has 2,491 square feet of finished floor space.

  4. Henry says:

    Those people in their leadership roles are not leading. I lost faith in them. Prices needed to be stabilized. How do ordinary Americans can afford buying houses to raise their families with prices are rising everything we buy, especially food, shelter and energy? Fix it.

  5. Mark Edy says:

    I agree with the comments about the need to renegotiate a new lumber agreement with Canada BUT I do not agree that the current lumber prices are high. The problem many seem to have is with the volatility of these recent prices. I began in the lumber business in 1971. At that time the Random Lengths price index for softwood lumber was approximately $150 per Mbf. Today it is around $1,050 or. About 7 times higher. During the same period the average new home price in this country has increased from $25,200 to $408,800 or over 16 ties. A new car is 14 times more expensive and a loaf of bread is 15 times more expensive during the same period. If anything lumber has been too cheap for too long. Even when the Random Length index hit $1500 per Mbf that was only 10 times that of 1971. Sorry, but I beg to differ when those of you complain about lumber prices being too high. They are not, but they are volatile and those of you that bid jobs need to take that into consideration.

    • I understand your point and if lumber rose every year and we were able to incorporate these increases into our budgets and charge the customer accordingly, it would not be this difficult to swallow. The way it has spiked within a few weeks with no warning is a problem to manage it into our pricing. We do 60 to 70 closings per month and customers that were signed two months ago were sold at the rate that had stabilized sense last summer. we are now 15K to 20K over budget. It is impossible to have such a radical adjustment is such a short period of time.

  6. Tyler Hoyt says:

    The real culprit is demand. Look at the housing starts. That’s the only number you need to know. The mill capacity in the US and Canada can not keep up with the current demand. Alas, help is on the way. Rising interest rates that translate into higher mortgage rates will slow down demand. Tariffs, doit yourselfer surge, 2020 are all just noise. Overall housing starts are the real driver of this undersupplied market.

  7. Jeff Hirschberger says:

    The staement that COVID Vacs will solve the prob is interesting at best. The paying to keep people at home
    the Increase of tariff on Canadian lumber would be comical if not for the horrible affect on our industry.
    When your costs go up over 30 +% in a year it beats Jimmy C when it was 18+%– I was there. Copper
    PVC etc are also going crazy. The increase in Petroleum is just another nail in our coffin.
    We complain about the decrease in our natural resources, but punish the increased use of Canadian
    resources. Will logic enter into this????

  8. Very challenging situation in an already difficult market. As a home builder that builds on average of 50-60 homes a year, this current situation has put a tremendous strain on operations.

  9. John Schillerstrom says:

    Time to only build spec homes and not put them on the market until you are almost done and know all your costs!

  10. Mark Cox- Owner- Vintage Construction LLC says:

    I have been a Builder for the last 38 years, Residential, Land Development and for the last 21 Years primarily Building Low Income housing for Elderly and IDD populations. I have seen a few Economic cycles over the years. Lumber always cycles up and down with supply and demand and Natural Disasters and economic times.
    In my opinion, it is mostly a supply and demand issue. As the demand surges in a growing economy, inflation goes up and then interest rates go up and then in an effort to control inflation, the Fed raises rates too much and too fast and then the Stock Market goes down in reaction to that. A recession of different magnitudes follows. Then Housing starts slow down to different degrees. This time the economy was surging to historic levels and then here comes Covid. The Pandemic did not directly cause this current problem however in a direct way Human reaction to Covid did. Almost everything was locked down by the Government and People were scared from what the Government was telling them. Mills who normally take some downtime for yearly maintenance, extended their downtime. The mills misread the situation and extended their downtime. However, at the same time, interest rates were at historic lows and people kept buying homes among other things. Also, People were fleeing some of the hotspots and moving to other areas of the country causing shortages of housing. In other areas of the Country, People just wanted a new house. Inflation started to surge and interest rates were kept artificially low when in other times the Fed would have started to raise rates. Now we do have a Supply problem and it isn’t just Lumber. Due to lockdowns in other segments most everything is hard to get in a timely manner. Because of high demand, the price of most everything is surging. Still no real action from the Fed. The current Administration doesn’t want a recession on their watch and appears to want to leave it for the next Administration. Furthermore, as the progressive Income Tax takes more money from higher bracket people, Inflation is in reality a progressive Tax on the poor and many of the poor have little or no disposable income to pay the higher prices. As much as I hate to say it, I think we need the Fed to raise interest rates to slow the demand. Only then will prices start to stabilize. It may cause another Recession, but I think it’s the medicine we need to take. We can’t continue down this path indefinitely.

  11. Kurt Grosse says:

    As a Realtor and former NV building engineer in Las Vegas who sells new homes, I think that the price of lumber has given the new home builders permission to make a larger profit. According to your graph, the price of lumber bottomed out for the year in August by $1200 per 1000 board feet. I promise no one lowered their price of their houses. At this time, savings isnt being passed on to the consumer. Publishing and reporting the rise in lumber costs again is just another reason for builders to raise prices for homebuyers… Did anyone report lumber prices dropping? Guess it wasn’t dramatic enough to make the TV news.

Leave a Reply

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