Lumber prices have been on the rise since the start of the COVID-19 pandemic, and it has continued to increase till today. The prices did reduce during the second half of last year, but it picked up in December again. The soaring lumber prices could have serious implications for the global costs of new homes. Thus, this article discusses this price increase and how it will most likely affect the price of new homes.
Soaring Lumber Prices Could Mean for the Global Costs of New Homes
Random Lengths has mentioned that the price of lumber is currently three times that of what it was before the pandemic. While the price may be 22% lower than the highest ever price, its consistent increase could result in the prices of new homes shooting upward.
Estimates of Price Increases by the National Association of Home Builders (NAHB)
The National Association of Home Builders (NAHB) released an estimate, claiming that the recent price change of lumber increased the price of a newly built home by over $18,600.In addition to that, the average cost of a new multifamily home has seen an increase of $7,300. What this means is that households will need to pay about an additional $67to their monthly rent payments for an apartment.
It’s also important to understand that soaring lumber prices affect the costs of remodeling existing homes. This is because lumber is used to create new structures within a home. Of course, how much this price increase will affect a remodeling project will vary based on the resources used for it.
The NAHB director of tax and trade analysis, David Logan, discussed that the high demand for houses because of low mortgage interest rates and low housing inventory has made it impossible for new construction to meet the market supply. As a result, there have been increases in home prices that are unsustainable.
Sawmill Output Is the Primary Reason for the Rise in Lumber Price
The inflation of the price of lumber is due to multiple reasons. That said, the most significant reason is that sawmills are unable to match the demand for lumber. The pandemic led to a significant drop in sawmill output. Since then, there has been some recovery, but labor shortages have made it impossible to meet the demand. Thus, there is a disbalance between the increase in new housing projects and sawmill output
Some other problems that have led to this price inflation are as follows.
· Ongoing disruptions in the supply chain
· Canadian lumber import tariffs
· Increasing wildfire season in British Columbia and the American West
Last Few Words
Evidently, soaring lumber prices have increased the costs of new homes, and that will continue unless lumber supply increases. So, if you’re looking to buy a home, it may be worth considering one now than later.
If you’d like to buy property for investment, relocation, retirement, or other purposes within or outside the US, you can visit Trinidigital. Here, you can buy, sell, and rent property in different countries, and you can gain access to advice from experts in the real estate industry.
