For a certain number of months last year, lumber had skyrocketed. Primarily from lack of supply resulting in a huge shortage in lumber, evan home projects impacted. While people worked from home at the start of the Covid-19 pandemic, people found themselves doing home projects more. This resulted in an even larger impact on lumber supply and prices. Insider mentions just how much lumber was in 2021:
In 2021, lumber prices soared as much as 142% to a record high of $1,733 per thousand board feet due to strong demand for the essential building material and supply chain disruptions related to the pandemic, wild fires, and flooding in Canadian timberlands. Lumber prices eventually cooled off considerably, falling as much as 75% to just $452 before rallying 184% to current levels
However, last year in June, lumber started to drop over 40%, and we all were starting to see some light at the end of the tunnel in lumber prices.
But 2022 is shaping to be a different outlook. With higher demand for new construction, builders cant pop up houses up fast enough to meet buyers' demands. As more and more demand for homes comes into play, should we expect to see another lumber crisis? Insider has some thoughts about that
- A survey of home builders revealed expectations that lumber prices will continue to soar in 2022.
- The expected boom comes as demand for homes remains strong and supply chain disruptions persist.
- "Lumber is expected to go back up significantly this year. Being told factories are still not operating at capacity and tariffs aren't allowing solid competition to provide relief," a home builder in August said
With the housing inventory of existing homes continuing to remain at a record low, we're seeing buyers take new avenues like purchasing new construction, which leads to a premium because of soaring prices with lumber costs
In 2021, an average single-family home had soared 184% from April 2020 to April 2021. This spike in lumber and related materials has added over $34K to the price of a new home in 2021. Should we expect to see this much more added again to new construction? It may be only January, but NAHB mentions that the latest wave of rising lumber prices has already impacted the price of an average new single-family-home again. Infact, "Over the past four months, lumber prices have nearly tripled, causing the price of an average new single-family home to increase by more than $18,600"
Fortune shows us a graph of lumber costs from Jan 2017- Dec 2021
Nasdaq showing lumber to be at 1143.70
I wish I could say that we can expect things to get a bit better with lumber costs, but it looks unlikely. Fortune mentions in their article:
don't expect cheap lumber anytime soon. Even if lumber prices pull back somewhat, it doesn't mean we're headed back to pre-pandemic levels. There is a shortage of around 4 million homes—a dynamic that is likely going to keep builders busy (aka buying more lumber) for years to come.
This is still the better time to buy, with interest rates still being in the low 3's and expecting to climb as early as Spring. This is the time to really maximize your purchasing power.
Jan 28th 2022: UPDATE: In recent days, there has been increased volatility, resulting in wide price swings. Nasdaq show's today's lumber price
If you’re in the market for a new home, please feel free to contact me HERE with questions about the market. We’ll be watching things like lumber prices along with broader market forces. If you are looking for a new home, we’ll want to be ready to jump in quickly when you are ready! I will continue to update you on both the lumber prices and new housing starts in the coming month's, so don't forget to subscribe