Lumber prices have continued surging in response to supply shortages spurred by the COVID-19 pandemic.
The lumber scarcity matched with increased demand during the pandemic drove costs sky-high, which in turn has increased construction and housing costs and left government officials and those within the industry grappling with how to rebound supply and bring costs down.
Between April 2020 and April 2021, the National Association of Home Builders said the “price per thousand board feet” increased by nearly 250% — from $350 to $1,200. Prices then soared past $1,400 in early May and have continued increasing since.
The high lumber costs have increased the price of a single-family home by about $36,000, the NAHB says. That’s priced “millions of middle-class households out of the market at a level they previously could afford.” It’s also added nearly $13,000 to the cost of an “average new multifamily” home — meaning rent for a new apartment has gone up by about $119 each month.
What’s being done to bring lumber prices down?
The NAHB said it has called for “prompt action” from President Joe Biden’s administration and other officials and in late May discussed the soaring lumber prices with U.S. Secretary of Commerce Gina Raimondo.
“Raimondo and NAHB CEO Jerry Howard discussed working together on convening a summit that would include representatives from the U.S. government, the lumber supply chain and the home building industry,” it said.
NAHB Chairman Chuck Fowke said in a news release that Raimondo acknowledged she and Biden are concerned about the effect of high lumber prices on the country’s economy.
“We take these issues seriously, and my staff and I are committed to continuing to work with all stakeholders, including reviewing relevant data and conducting analysis to identify targeted actions the government or industry can take to address supply chain constraints,” Raimondo said, according to the NAHB.
Some GOP lawmakers have criticized Biden for the high lumber costs, accusing him of “declaring war” on construction jobs and not taking enough action, Fox Businesses reported.
“Lumber prices are an issue that has many causes, from economic complications from the coronavirus pandemic to difficult trade issues with Canada. Biden has shown he is either unwilling or incapable of tackling these obstacles,” Rep. Bob Gibbs of Ohio said in a statement to Fox News.
But Biden said during remarks in late May that rebooting the economy isn’t like “flipping on a light switch” and that there will be supply chain issues on the way to “steady growth.”
“In the coming weeks, my administration will take steps to combat these supply pressures, starting with the construction materials and transportation bottlenecks,” Biden said.
Some groups have urged Biden to remove lumber and steel tariffs imposed during President Donald Trump’s administration, CNN Business reports. A White House spokesperson told CNN Business that the Biden administration is pursuing “every avenue that could help relieve bottlenecks and strengthen our economic recovery” and that it will continue to review Trump-era trade policies.
“Tariffs are one tool in the toolbox to support American workers and American industry,” the spokesperson said, according to CNN Business.
What pushed prices so high?
Some sawmills were forced to shut down at the beginning of the pandemic, limiting lumber supplies.
At the same time, many American stuck at home due to COVID-19 restrictions stocked up on materials to complete do-it-yourself projects and demand for construction or home improvement projects increased.
Additionally, Fortune reports that many potential homebuyers opted for construction when record-low interest rates spurred a boom in the housing market, further driving up demand.
“It was the perfect storm,” Kari Doll, manager at a lumber yard in Montana, told the Bozeman Daily Chronicle.
The decrease in supply coupled with the increase in demand drove lumber prices sky-high. Now, the backlogged supply hasn’t been able to catch up with the high demand and lumber prices have remained elevated.
Experts have offered varying projections on when prices could come down, with some saying they could ease in the summer and others saying it’s unclear when or if prices will return to where they were before the boom.