Lumber prices triple, causing thorn in side of builders and home renovators – UW GROUP

Lumber prices triple, causing thorn in side of builders and home renovators

Lumber is the latest pandemic product to fall victim to supply-chain disruptions, which have jacked the price up threefold and sidelined builders and contractors with lengthy wait times.

“I’ve been doing this long enough to have lived through a few other cycles of up and down and supply issues, and I have never seen anything in over 40 years of building that compares,”

Last Friday, lumber skyrocketed to a record high price of $1,048 per thousand board feet, compared to just $348 for the same amount a year ago, Dustin Jalbert, a senior economist specializing in wood products at Fastmarkets RISI, said. The average price for that same unit hovered around $380 over the last five years.

The simplest explanation for the price shock is the same supply-demand formula that’s created comparable shocks in everything from toilet paper to dairy to kitchen appliances throughout the pandemic — global manufacturers are facing unforeseen challenges that slow output while demand from consumers soar.

“The labor market’s just in complete chaos,” Jalbert said.

Many sawmills have been forced to halt production over the last year due to positive COVID-19 cases. Most of America’s softwood lumber, used mostly in construction and renovation, comes from mills in the U.S. South, the Pacific Northwest and Canada, Jalbert said.

And beyond issues in supply, producers never anticipated the meteoric rise in demand that would follow.

“A lot of mills curtailed fairly heavily early on in the pandemic, thinking demand would collapse, and that didn’t happen,” Jalbert said. “And now they’ve been trying to play catch up this whole time.”

House owners have been renovating and taking on DIY projects at furious speeds, while record low interest rates qualify more potential buyers to purchase new properties.

“It’s really a double-edged sword, because demand hasn’t been this high in a long time,” Troy said.

While the lumber shock is a thorn in the side of contractors and builders, it’s ultimately the buyer who will likely absorb the additional costs, Troy said.

For Sean Cromarty, a realtor and home-flipper in Monmouth County, the record lumber prices and long lead times make it harder for him to justify investing in various properties, especially those in need of fixing up.

As contractors extend delivery estimates, Cromarty said the entire renovation process drags with it, sending money down the drain.

“Depending on a property, that can be thousands of dollars every day that that supply-chain issue costs you,” he said.

So when can DIY’ers and contractors expect the price shock to correct? Experts say not to get your hopes up anytime soon.

It will likely take at least a year for mills to reach full capacity again and for prices to return to normal pre-pandemic levels, though it’s hard to predict considering supply-chain constraints have persisted into 2021, Jalbert said.

“It’s going to make it really hard for prices to correct in the near term,” Jalbert said. “In three to six months, you might see some softening, but we’re not going to return back to $300 for a thousand board feet by the summer.”


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