Lumber prices have surged by almost 250% since April 2020, significantly threatening housing affordability across the US.
According to the National Association of Home Builders, the latest skyrocketing increase in lumber prices threatens to raise the cost of a single-family home by nearly $36,000. The price of a thousand-foot board has surged by more than 40% in the last month to above $1,450 on Friday. “The market is in trouble. It could spiral out of control in the next few months,” said Fastmarkets RISI senior economist Dustin Jalbert, and later cited by Fortune.
Jalbert attributes the bullish rally in lumber prices to backlogged supply, which is struggling to keep up with rising demand amid ongoing home improvement and home construction projects. Aside from that, the price hike is also partly due to supply chain disruptions, which started at the beginning of the pandemic when lumber yards were forced to shut down.
At the same time, adverse weather conditions that forced refinery shutdowns in the Gulf Coast also contributed to shortages of other building supplies. As a result, lumber prices are expected to continue on their upward trajectory, and will not cool until demand tapers off— which is likely not going to happen until the abnormal home building and renovation season subsides.
Information for this briefing was found via NAHB and Fortune. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.