Lumber Prices Are Up 20% in the Last Four Weeks
For the first time since September, lumber prices are on the rise again, reaching $650 per thousand board this month.
After a three-month lull that began in September, lumber prices have started rising again. This month lumber prices increased 20% to $650 per thousand board, according to data from Random Lengths and reported by the National Association of Home Builders.
Lumber prices had steadily increased since the start of the pandemic through September. From April through August, lumber prices increased 110%, according to the NAHB. In September, lumber prices reached $950 per thousand board, an increase of 28.6%. The pricing was an all-time high. However, the following month, prices fell to $550 per thousand board. Lumber pricing has had a significant impact on construction costs this year, adding thousands of dollars to a developer’s bottom line.
National Association of Home Builders estimates that the increase in lumber costs increased new single-family home prices and apartment prices by approximately $14,000 and $5,000, respectively. Several factors have contributed to the rising costs, including the fires on the West Coast, increased home renovation activity and new single-family construction. Remote work policies also reshuffled population centers and fueled new construction in suburban markets and even rural areas.
This trend diverges from initial forecasts that construction costs would decrease during the pandemic. Data from the Bureau of Labor Statistics shows an increase of 24,000 construction jobs as of July. In addition, NAHB/Wells Fargo Housing Index found that builder confidence reached an all-time high if 78 in August.
Many developers are seeing both limited availability of materials and rising costs. In the National Multifamily Housing Council’s construction survey, 58% of respondents said they were impacted by a lack of materials and 82% of respondents reported price increases in materials. In the previous survey, only 18% of respondents reported price increases.
The increase in lumber pricing over the last four weeks could be a temporary trend. Some lumber producers are reducing production to prepare for slower construction activity during the winter months, which could have put pressure on pricing.