An article by the National Association of Home Builders found that the Random Lengths Framing Composite Price reached upwards of $523 per 1,000 board feet this past week for the week ending on July 10. This peak price marks the only time that lumber prices have tipped the scales above $500 per 1,000 board feet in two years, the last being on July 2018.
This uptick—an increase of 50% price growth since the week of April 17, 2020—has been attributed to several factors. According to experts in the industry, all roads lead to COVID-19, as several key elements directly related to the pandemic that has driven up lumber prices.
One of these factors includes that many lumber mills were forced to close—or at least severely limit their output and staffing—right around April and May due to the stay-at-home restrictions brought about by the government as safety precautions in the face of the pandemic. Prices for lumber during this time dipped substantially as businesses anticipated an equally drastic drop in consumer demand.
However, mills that remained in operation (albeit via skeleton staffs) did not anticipate the surprising (and substantial) increase in demand within the do-it-yourself (DIY) niche of builders (a sector which includes big box store demand) even during the Coronavirus crisis.
With these steady consumers still purchasing the product and keeping things humming, housing was able to withstand the economic woes of the pandemic much better than most other niches, and definitely better than was anticipated.
“The combination of all of these factors has caused a dislocation of the usual supply/demand equilibrium. Suppliers continue to catch up to orders to the point that, in some cases, builders and traders are being forced to place orders without a delivery date or price,” the report states.
Rising lumber prices could lead to increasing values, as CoreLogic’s Home Price Index for May 2020 found home prices rose 4.8% annually in May.
When compared with just last month (April 2019), home prices experienced an uptick of 0.7% during May. Experts point to a continued and steady increase in demand, paired directly with a decrease in supply, for the positive home price growth this season.