The Rise in Lumber Prices
Lately, we’ve had many conversations with customers about the steep rise in lumber prices. Our suppliers are having a hard time keeping inventory on the shelves, providing accurate quotes for materials, and material orders have substantially longer lead times because the product sells out before it hits the yard. We wanted to share some articles we found that bring to light the reasons behind the skyrocketing prices.
The National Association of Home Builders has several articles that dive into this issue, and they have been keeping a close eye on the economic impact of the lumber industry. In this July article, they stated two factors they believe that increases the lumber prices:
“Rising demand from big-box retailers — driven by do-it-yourself activity and the fact that building supply stores have been designated as “essential businesses” across the nation — has limited the supply available to traders, wholesalers and distributors; and
Slowing mill production as home building activity dropped sharply during the early weeks of the outbreak.”
National Association of Home Builders, “Lumber Prices Move Sharply Higher on Rising Demand and Supply Constraints” Eye on the Economy, May 18, 2020, accessed August 12th, 2020, http://nahbnow.com/2020/05/lumber-prices-move-sharply-higher-on-rising-demand-and-supply-constraints/
In a more recent article, the NAHB discusses the decrease in housing inventory in the real estate market, which increases the demand for new housing. This means builders are trying to buy large amounts of lumber right now, causing the lack of supply.
“Due to insufficient domestic production and tariffs on Canadian sources, the price of lumber has staged a staggering increase in recent months, rising roughly 80% since mid-April…”
Robert Dietz, “Soaring Lumber Prices Limit Housing’s Growth” NAHB Eye on the Economy, August 6th, 2020, accessed August 12th, 2020,http://nahbnow.com/2020/08/soaring-lumber-prices-limit-housings-growth/
Hoping this article can provide some clarity behind the contractor's rise in prices for home update projects. For more information, check out the article links in the credit sections of this post.