According to the National Association of Home Builders (NAHB) Economics team, the price of lumber has tripled over the past year, forcing the price of a new single-family home to rise $35,872 on average. Also noted by NAHB, the price hike in lumber has also added nearly $13,000 to the market value of an average new multifamily home, meaning households are paying approximately $120 each month more to rent a new apartment.
New data from Random Lengths for the week ending April 23 shows the price of framing lumber near $1,200 per thousand board feet—up nearly 250% since last April when the price was nearly $350 per thousand board feet.
This week, the S&P CoreLogic Case-Shiller Indices found home prices continuing to rise nationwide in February 2021, a 12% year-over-year climb, and 11.2% month-over-month rise from January.
NAHB calculated their home price increases based on the softwood lumber that goes into the average new home, as captured in the Builder Practices Survey conducted by Home Innovation Research Labs.
“Builders do not in general buy lumber and other building products directly from sawmills, but from an intermediary like a lumber yard,” said Paul Emrath, VP of Survey and Housing Policy Research for NAHB, in a recent NAHB blog post. “For that reason, sawmill prices are marked up by gross margin as a percent of sales for the ‘lumber and other construction materials’ industry, as reported in the U.S. Census Bureau’s Annual Wholesale Trade Tables.”
A number of factors have contributed to this new rise in materials, including workforce production as a result of the pandemic; an imbalance in the supply of lumber to demand; tariffs on Canadian lumber imports into the U.S. market; and the rise in home remodeling projects as a result of the pandemic.
NAHB has taken part in a series of measures to rectify the situation, such as:
- NAHB Chairman Chuck Fowke and First Vice Chairman Jerry Konter holding in-person and virtual meetings with congressional leaders earlier this month to urge them to address rising lumber prices.
- NAHB and a coalition of more than 35 organizations issuing a joint letter to U.S. Department of Commerce Secretary Gina Raimondo calling for an examination of the lumber supply chain and remedies to fix the situation.
- NAHB has also sent letters to President Biden, Agriculture Secretary Tom Vilsack, U.S. Forest Service Chief Victoria Christiansen and U.S. Trade Representative Katherine Tai requesting action to address the dilemma.