Between environmental factors, the surge in home buyers and the pandemic, our lumber usage is at a record breaking high. While that may sound like the lumber industry is doing well, there is a major shortage, and supply is continuing to dwindle.
“From 2015 to 2019, lumber traded at $381 for 1,000 board feet, according to Fastmarkets. This month, it reached an all-time high of $1,104 for the same amount. The lumber shortage has added at least $24,000 to the cost of a new home, according to the National Association of Homebuilder” (The Atlantic).
How does this impact Realtors, Home Buyers & Service Providers?
Within one year, lumber prices have soared close to 250%. The influx of home buyers has impacted the supply and demand causing a Lumber shortage as well as increase for the need of material.
Economically, a single-family home’s cost can increase over $20,000+, impacting home buyers and Realtors. Service providers such as home construction services (HCS) are having a hard time purchasing supplies for projects already approved for contract. Builders are now adding escalation clauses to protect themselves from the offset of lumber prices as well as obtaining 2-month price guarantees from suppliers. These factors can impact sales and be a cause for a slower closing.
Provided below is a graph from the National Association of Homebuilders that shows the indication of deportment of the lumber market prices in the United States and Canada.
How lumber will affect the entire home industry, and are there alternatives?
With no short-term solution, the prices of lumber will continue to rise as supply cannot keep up with demand. This will have a trickle-down effect on the construction industry. As prices rise and supplies run short, consumers are substituting wood with other materials like concrete. Lumber was once the cheaper alternative, but man-made materials are becoming the more viable option.