Why are home building costs going up?
Since April 2020, lumber prices across the United States have continued to skyrocket. Prices for the composite price of lumber has been rising to 150%, increasing the cost of a single-family home by more than $16,000 on average.
The price increase is due to a combination of factors. Many lumber mills reduced their production due to stay-at-home orders and social distancing measures due to the coronavirus pandemic. Then, an unanticipated increase in the demand for framing lumber caused a shortage of domestic lumber production. Finally, the extreme volatility in lumber prices has been exacerbated by continued tariffs on Canadian lumber imports, averaging more than 20%.
Back in February and March of 2020, the lumber industry projected that housing would be adversely affected by the coronavirus pandemic, and the mills depleted their inventories. However, there was an increased demand for new homes, and the “mills weren’t prepared,” says MarketWatch in the article, “Lumber prices have skyrocketed — and that’s bad news for home buyers.” The situation is significant because, according to MarketWatch, framing lumber makes up at least 20% of the materials cost of building a home.
NAHB Chairman Chuck Fowke said that Senior Officers held talks with members of the White House National Economic Council (NEC) on Aug. 28 to discuss the impact that soaring lumber prices are having on the housing industry. “The White House is listening to us,” said Fowke. “They are moving and trying to get something done. They understand the importance of our industry.”
NAHB said that it will continue working on all fronts to find solutions that will ensure U.S. homebuilders have access to a stable supply of lumber at reasonable prices to keep housing affordable for hardworking American families. “The Senior Officers are working hard together to address these issues,” said Fowke. “This has become a top priority for myself and the staff at NAHB.”
The NAHB (National Association of Home Builders) based their findings on any softwood lumber that goes into the average new home. This includes 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.
Along with this are softwood products of varying dimensions (including any that may be appearance grade or pressure treated for outdoor use), plywood, OSB, particleboard, fiberboard, shakes and shingles — any of the products sold by domestic sawmills and tracked on a weekly basis by Random Lengths. Beyond lumber, prices of several other building inputs continue to rise, and average delivery times for many are growing.