NAHB Sounds the Alarm on Rising Lumber Prices

The National Association of Home Builders has upped the ante in its calls for the Biden Administration to intervene in the skyrocketing US lumber market, with letters sent this week to Agriculture Secretary Tom Vilsack and the US Forest Service Chief Victoria Christiansen urging policymakers to address rising lumber prices and supply shortages.

The missive to Secretary Vilsack asked that the lumber supply chain be included in a report to the White House about President Biden’s executive order to secure supply chains for critical and essential goods.

“Thank you for your efforts to examine America’s agricultural supply chains,” the letter stated. “We respectfully encourage you to include the lumber supply chain in your review and report to President Biden. We stand ready to work with you to ensure American consumers and home builders have a reliable, affordable supply of lumber to meet housing demand.”

And to US Forest Chief Christiansen, the message was clear:  “Improving the health of our nation’s forests and increasing the supply of domestic timber are not mutually exclusive goals, and we strongly urge you to maintain current harvesting plans for the National Forest system…Better forest management practices will not only promote the health of our nation’s forest system but also improve housing affordability. As additional supply of domestically produced timber is brought into the market, upward pressure on lumber prices will soften.”

The letters are the latest in a string of lobbying efforts by the NAHB, which has been sounding the alarm for months on the impact of rising prices on homebuilders and buyers. Last week, the association led an effort of 35 organizations exhorting Commerce Secretary Gina Raimondo to “examine the lumber supply chain, identify the causes for high prices and supply constraints, and seek immediate remedies that will increase production.”

The issue has caused a ripple effect in the building and buying markets, as residential builder sentiment continues to fall as a result of rising materials prices. The latest NAHB/Wells Fargo Housing Market Index shows that builder confidence for newly built single-family homes fell two points to 82 in March, down from a peak of 90 in November. And this follows a volatile year for the lumber market, which has faced both supply and demand issues, particularly as retail locations sought lumber for temporary COVID-19 protection barriers, according to JLL’s construction outlook for the first half of 2021.

Following a brief respite, prices again jumped in December and January. And data from the NAHB and Random Lengths showed that the price of lumber hit a record high of $1,000 in February.