If you’ve been holding off on completing a construction project or home renovation, you might want to stop procrastinating and start building; lumber prices are soaring. In fact, the cost of lumber is about 110% higher than it was a year ago—and it’s not showing signs of slowing down! Many vendors predict steady monthly price increases for the foreseeable future.
Why Are Lumber Costs on the Rise?
There are a number of reasons the price of lumber (and other materials, such as MDF and plywood) is on the rise. The pandemic created a shift in homeowner needs. Rock-bottom low interest rates created a surge in buyer demand—and the housing supply simply couldn’t keep up.
Additionally, rising labor costs, both domestic and overseas, as well as skyrocketing freight rates, have forced suppliers to up their prices to wholesalers and retailers. In short, it’s the perfect storm of price-hiking factors.
Lumber suppliers and mill operators misread the market
In 2019, the demand for new construction was actually down a bit from previous years. Then, when the pandemic struck in 2020, many mill operators and lumber dealers opted to cut their production and decrease their labor forces to avoid taking serious losses as the economy tumbled. However, they could not foresee the sudden demand for housing and labor that would leave the entire industry in a shortage.
Housing demand has surged
In the past year, we’ve all likely found ourselves spending a lot more time at home. And as such, our homes have had to work double-duty as offices, gyms, yoga studios, classrooms, and more. For many, particularly renters or apartment-dwellers, their current homes were simply not enough. This led thousands to look for ways to renovate their current home or consider shopping for a new home.
Rock-bottom interest rates helped to spur the home-buying movement. First-time buyers flooded the market, hoping to snag a home without the high interest rate. However, homeowners have not been so eager to list or sell their homes. In fact, housing supply is at an all-time low; the number of active buyers far exceeds the number of homes for sale.
Lumber & housing are in short supply
What do you get when you combine a high demand for homes and a severe shortage of housing inventory? You get an increased demand for new construction homes; new construction housing starts are up 30% year over year.
Now, couple that with a surge of home renovations and reduced lumber production, and you’re looking at a serious lumber shortage! Throw in rising production and shipping costs… and you’ve got skyrocketing lumber prices.
Costs for Homes & Remodels Are Increasing
It’s not just the cost of lumber that’s on the rise. New construction homes have increased in price by nearly $25,000 since August 2020. Renovations, improvements, and other home projects have also increased in price. This includes any project involving stock lumber of various dimensions, plywood, baseboards, moldings, any type of pressure-treated lumber, and even windows and doors.
Should you build or wait?
The hard truth is that these cost increases will likely make your renovation project more expensive. The harder truth is that the longer you wait, the more expensive your project is likely to become. If you’re uncertain whether you should build or wait, it’s probably best to speak with a contractor to iron out the details and get an estimate based on today’s prices.
Thinking about building? Curious as to how these prices might affect your project?
If you’re thinking of starting a home renovation, or you’re curious as to how these lumber increases might affect the price of your project, please contact Raleigh Woodworks. We’d love to help you plan out your project and give you a real-time estimate. Give us a call today!