Good News: Lumber Prices Are Starting to Fall… Finally

May 17, 2021 Topic: Lumber Prices Region: Americas Blog Brand: Politics Tags: EconomyCoronavirusPandemicPrice HikesHousing Market

Good News: Lumber Prices Are Starting to Fall… Finally

A year ago it was expected that the sales of new houses would soften during the pandemic, and as a result, sawmills cut production so as not to have a glut of supply. However, those predictions were way off.

 

Wood remains a timeless building material. It is a true “renewable” resource where supply has typically been able to meet demand. However, anyone considering a home improvement project this year likely has learned that the cost of all building supplies has increased dramatically in recent months.

Wood certainly isn’t cheap these daysand the prices aren't for exotic or rare woods but the basic two-by-fours. The same length of wood that sold for $3.39 before the start of the pandemic could cost $8.79, while half-inch plywood that cost $15.99 a little over a year ago can retail for $48.95.

 

Blame it on the pandemic, but also a strong housing market.

A year ago it was expected that the sales of new houses would soften during the pandemic, and as a result, sawmills cut production so as not to have a glut of supply. However, those predictions were way off. The housing market didn't suffer nearly as much as expected, and Americans forced to stay at home found they could use a bit more space. They also began to take on more home improvement projects.

Whether it was for renovating a house or building a new one, wood was needed and the demand has simply outpaced supply. Now, with the summer building season picking up pace, there simply aren't enough building materials to go around.

Hot Commodities

It isn’t just wood that has been in high demand. All commodities have seen an increase in prices in recent days as a result of production that was cut due to the pandemic, but lumber spot prices rose by 350 percent from a year ago, according to Business Insider.

The increase in the cost of lumber isn’t just impacting those doing renovations or looking to build a backyard shed, according to the National Association of Home Builders. In fact, the spike in lumber costs could drive up the price of a new single-family home by as much as $36,000 from April of last year.

The good news is that the record-high prices won’t last. Domestic production of wood has already started to increase, and while it is unlikely that the prices fall to pre-pandemic levels anytime soon, last week lumber futures and spot prices fell for the fifth straight day. Spot lumber prices are still up roughly seventy-eight percent since the start of the year, and as production increases prices could continue to fall.

However, it could be well into 2022 before the cost of lumber returns to previous levels. For now wood is just going to cost more.

Where there is such demand there are people who look to make a quick profit, and that sadly created a new black market for wood. For example, poachers have cleared trees from Western Canadian forests, according to the Guardian. Officials on Vancouver Island reported that at least one hundred trees had been illegally cut down in recent months.

Peter Suciu is a Michigan-based writer who has contributed to more than four dozen magazines, newspapers and websites. He regularly writes about military small arms, and is the author of several books on military headgear including A Gallery of Military Headdress, which is available on Amazon.com.

Image: Reuters