Per the National Association of Home Builders (NAHB), lumber prices have tripled over the past 12 months and have caused the price of an average new single-family home to increase by $35,872.
This is an increase over NAHB’s calculated $24,000 extra that HousingWire reported back in just February of this year.
Other building material prices have been steadily rising as well, said Chuck Fowke, NAHB chairman, who added that the trade organization has been “monitoring” the situation.
“This unprecedented price surge is hurting American home buyers and home builders and impeding housing and economic growth,” Fowke said. “These lumber prices are clearly unsustainable.
Policymakers need to examine the lumber supply chain, identify the causes for high prices and supply constraints and seek immediate remedies that will increase production.”
The HousingWire article discussed how the rising prices can be traced back to the onset of the COVID-19 pandemic in the U.S when there was a shut-down of many lumber mills and forced home prices upward as inventory dwindled. This, coupled with historically low mortgage rates below 3% drove homebuyers to make a move, so to speak. Houses were selling faster than new listing inventory was coming on the market, and homebuilders are having a hard time keeping up with the subsequent increased demand in new home construction.
NAHB stated that as of the week ending April 23, 2021, the price of framing lumber is nearly $1,200 per thousand board feet. That’s up almost 250% since April 2020, when lumber prices were roughly $350 per thousand board feet.
Doug Duncan, Fannie Mae chief economist, stated that “The supply of existing homes for sale and an elevated level of new homes sold — but not yet constructed — should help bolster a strong construction pace of new housing starts moving into the spring buying season.” Low inventory is still problematic, but more new builds appear to be in the pipeline.
Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.
