Lumber is the latest\u00a0pandemic\u00a0product to fall victim to supply-chain disruptions, which have jacked the price up threefold and sidelined builders and contractors with lengthy wait times.<\/p>\n\n\n\n
\u201cI\u2019ve 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,\u201d<\/p>\n\n\n\n
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.<\/p>\n\n\n\n
The simplest explanation for the price shock is the same supply-demand formula that\u2019s created comparable shocks in everything from toilet paper to dairy to kitchen appliances throughout the pandemic \u2014 global manufacturers are facing unforeseen challenges that slow output while demand from consumers soar.<\/p>\n\n\n\n
\u201cThe labor market\u2019s just in complete chaos,\u201d Jalbert said.<\/p>\n\n\n\n
Many sawmills have been forced to halt production over the last year due to positive COVID-19 cases. Most of America\u2019s softwood lumber, used mostly in construction and renovation, comes from mills in the U.S. South, the Pacific Northwest and Canada, Jalbert said.<\/p>\n\n\n\n
And beyond issues in supply, producers never anticipated the meteoric rise in demand that would follow.<\/p>\n\n\n\n
\u201cA lot of mills curtailed fairly heavily early on in the pandemic, thinking demand would collapse, and that didn\u2019t happen,\u201d Jalbert said. \u201cAnd now they\u2019ve been trying to play catch up this whole time.\u201d<\/p>\n\n\n\n
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.<\/p>\n\n\n\n
\u201cIt\u2019s really a double-edged sword, because demand hasn\u2019t been this high in a long time,\u201d Troy said.<\/p>\n\n\n\n
While the lumber shock is a thorn in the side of contractors and builders, it\u2019s ultimately the buyer who will likely absorb the additional costs, Troy said.<\/p>\n\n\n\n
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.<\/p>\n\n\n\n
As contractors extend delivery estimates, Cromarty said the entire renovation process drags with it, sending money down the drain.<\/p>\n\n\n\n
\u201cDepending on a property, that can be thousands of dollars every day that that supply-chain issue costs you,\u201d he said.<\/p>\n\n\n\n
So when can DIY\u2019ers and contractors expect the price shock to correct? Experts say not to get your hopes up anytime soon.<\/p>\n\n\n\n
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\u2019s hard to predict considering supply-chain constraints have persisted into 2021, Jalbert said.<\/p>\n\n\n\n
\u201cIt\u2019s going to make it really hard for prices to correct in the near term,\u201d Jalbert said. \u201cIn three to six months, you might see some softening, but we\u2019re not going to return back to $300 for a thousand board feet by the summer.\u201d<\/p>\n\n\n\n