NEW HOUSING COSTS CONTINUE TO INCREASE DUE TO SOARING LUMBER PRICES
Wondering why prices have increased in new home construction? Soaring lumber prices have tripled over the past 12 months causing the price of an average new single-family home to increase by $35,872, according to a new NAHB analysis. The increased lumber cost isn’t just affecting new home construction. Households will be paying $119 a month more to rent a new apartment. And, existing homeowners starting remodelling projects will feel sticker shock with a visit to a building supply store.
The price of framing lumber rose to nearly $1,200 per thousand board feet — up nearly 250% since last April according to Random Lengths. Further adding to affordability woes, building material prices have by and large been steadily rising since 2020 and were up across the board in March.
Due to the increase in average new home prices, more than 5.5 million U.S. households have been priced out of the market. That means those households could qualify for a mortgage to buy the average new home before the price increase, but no longer can. These estimates reinforce the need to find ways to reduce the cost curve for adding much-needed inventory to the housing market, particularly as buyers remain frustrated by a lack of available homes for sale.
These unprecedented lumber price hikes are attributable to a few factors. Many mills reduced production last spring due to stay-at-home orders and social distancing measures enacted by state and local governments at the onset of the coronavirus pandemic. When it became clear in the ensuing months that housing weathered the storm much better than predicted and demand remained strong, lumber mills did not ramp up production
accordingly. Lumber producers also did not anticipate the massive uptick in demand from do-it-yourselfers and big-box retailers during the pandemic. Finally, the extreme lumber price volatility has been exacerbated by tariffs on Canadian lumber imports into the U.S. market.
As lumber prices remain stubbornly high, the Home Builders Association of Greater Chattanooga in conjunction with the NAHB continues to work relentlessly with the White House, Congress and lumber producers to increase production and bring prices lower. Our advocacy team – Government Affairs, Communications, Economics and Legal – continues to work doggedly on all fronts to find solutions that will ensure a lasting and stable supply of lumber for the home building industry at a competitive price.
What can you do to help? Contact your elected officials and let your voice be heard. If you’re a local business owner or manager in the housing industry, consider becoming a member of the Home Builders Association of Greater Chattanooga to help us collectively work on a solution to the increased lumber shortage as well as many other important community issues. Visit www.HBAGC.net for more information.