How will custom home building be affected by rising lumber prices?
It seems like the custom home building industry can’t catch a break. Almost immediately after the COVID-19 pandemic started, prices of lumber started fluctuating all over the place. And now, issues like inflation have led to rising lumber prices.
How are these higher costs affecting custom home builders and what can we expect in the future? We can’t pretend to have all the answers, but will try to break it down as succinctly as possible.
What’s Been Going on with Rising Lumber Costs?
Take a look at any lumber yard across the country – and globally, as well – and you’ll see that the cost of all building materials have gone up. Although it’s true that costs started dropping after hitting a record high last May, we’ve been seeing increases again this year. The precise number fluctuates and differs depending on the region. Prices have been hovering at around three times the average pre-pandemic cost.
How Are Rising Prices Affecting Custom Homes?
We’re obviously not breaking any ground here by telling you that the rising prices of lumber will greatly affect custom home building. As of February of this year, the National Association of Home Builders stated that the new house price of the average single-family home has increased by more than $35,000.
More specifically, softwood lumber – which was already at a high price – has increased by nearly 50% since last fall. If these trends continue, this will affect housing affordability for thousands of builders and buyers, which could devastate the housing market to a large degree.
The Historical Ebb and Flow of Lumber Prices
The simple truth is that lumber prices have always had an ebb and flow to them. The price of lumber is greatly affected by a variety of factors, going all the way down to the beginning of the supply chain where the lumber is created. Then, you need to factor in increased shipping costs, fuel prices, supply and demand, and other components. As much as this may sound like doom and gloom, what it basically boils down to is that we’ll eventually see more reasonable pricing.
Are Labor Costs Affecting Custom Home Building?
Many people have been discussing the possibility that an increase of labor costs have been affecting custom home building. Although it’s true that many markets have increased wages for a variety of workers, these increases have only had a negligible effect on the costs of home construction. The bigger problem is that many lumber mills are still operating with fewer workers because of labor shortages and ongoing COVID-19 safety requirements. Therefore, despite the high demand for lumber, less lumber is being produced, which keeps the price up.
Will Lumber Costs Continue to Rise This Year?
We’re already halfway through the year and we’ve definitely seen some decreases, but it remains to be seen if those lower prices will stick. While gas prices are going down, many consumer goods are not. This would lead us to believe that lumber prices may rise or stay the same in the near future.
However, with everything being in flux right now, it’s getting increasingly difficult to ascertain in the short term. The smart thing to do if you’re going to build a custom home is to factor in the current lumber prices and get it going. After all, prices could rise and you could be missing out on your new home for however long you wait.
Contact Peninsular Lumber for Assistance with Custom Home Building
As the most trusted lumber company in Tampa, Peninsular Lumber features competitive prices even in trying times. If you have any questions about custom home building materials or lumber costs, reach out and call us at (813) 875-8805 today. We look forward to you visiting our lumber store in Tampa Bay!