The Timber Industry is Stumped
Surging demand and next-level lumber prices are leaving lumber producers and home builders in a bit of a conundrum.
Lumber supply has plummeted due to sawmills’ pandemic precautions while home builders are ramping up production because of low home inventory and interest rates.
Add in all the quarantine DIY projects, and suddenly that dream farmhouse [or any home project including lumber] might just break the bank.
By the numbers:
- Lumber price per thousand board feet is up a whopping 188% to $1,044 since the start of the pandemic.
- The average new single-family home price is up $24,000+ on just lumber costs alone.
- Lumber futures hit $1,000 per thousand board feet in February, compared to last year’s average of $456.
Both ends of the supply chain are feeling the brunt of the situation. Sawmills are paying producers the lowest prices in decades due to a surplus of standing southern pines. And the National Association of Home Builders urged the Biden Administration to review the lumber supply chain, suggesting strategies to boost supply.
Looking ahead: If COVID-19 cases continue to drop, mill production can ramp up. And new producers are expected to enter the piping hot market, increasing lumber supply.
But the strong home building will continue into 2022, and concerns remain about construction firms with fixed-price contracts who can’t absorb crippling price increases and might go out of business.