What will wood prices be like in 2022?
If you have been keeping up with the news on wood prices, you probably know the massive rollercoaster that the industry has been through in the past two years. Given the unexpected boom in the housing market, compounded with supply chain shortages and other factors, lumber prices increased significantly in 2020, continuing through 2021.
That said, the market was a lot more volatile in 2021. From reaching record highs of almost $1,700 per thousand board feet in May, then dropping to $389 in August, lumber prices became unpredictable and extreme. So, with everything that has happened so far, what can home builders expect for 2022? If you are planning any construction projects soon, check out this year’s outlook for wood prices.
Lumber Prices to Remain High
Before the end of 2021, experts predicted that wood prices would remain high in the coming year. This projection results from many factors, including massive floods in British Columbia, labor shortages in sawmills, and increased demand for housing.
Fast forward to today—the new year may have just begun, but it looks like the predictions were accurate as the lumber market is already looking like a repeat of 2021. The price of lumber was already picking up in December 2021, but it remained below $1,000 per thousand board feet. Just one month later, prices have once again exceeded the thousand-dollar threshold.
On January 12, lumber prices jumped to $1,284 per thousand board feet. While this is still lower than the all-time high price last May 2021, this is already the highest since June 2021. The increase came from sustained demand for housing and supply chain disruptions caused by travel restrictions during the pandemic. Aside from this, many factories are still operating below capacity, resulting in a massive shortage of lumber and other building materials.
Generally, wood prices remain high as demand continues to be higher than supply. However, how high prices will go is still uncertain, which will be discussed below.
How High Will Lumber Prices Go in 2022?
Wood prices hit an all-time high last spring and summer because of the demand-supply imbalance. The quarantines and lockdowns forced factories to halt operations, causing a major production backlog. Combine this with the unexpected increase in demand for real estate, and you can see why prices skyrocketed. It later dropped as production picked up and home builders slowed down construction.
So, the big question now is whether the same thing will happen this year? Will prices go up as high as they did in 2021? Truthfully, the outlook remains uncertain as experts seem to have differing opinions on the matter.
Some experts believe that the huge lumber bubble last year will probably not happen again. According to them, the real estate market will likely slow down as the COVID-19 situation gradually eases. In addition, as the pandemic boom comes to an end, record-low interest rates will rise again, along with inflation rates. So, while housing is expected to remain a seller’s market through 2022, the slowdown in growth may prevent lumber prices from peaking again.
That said, other experts think that lumber prices will remain high. Last year’s bubble was caused by all the disruptions from the pandemic, but this time, many other factors are causing the price increase. For one, the United States Commerce Department has increased tariffs on Canadian lumber imports, which the US lumber industry is heavily reliant on for supply. With tariffs at almost 18%, lumber prices are expected to increase, and supply will likely be constrained.
Likewise, contrary to previous beliefs on the real estate slowdown, some experts predict that housing demand will stay strong as more millennials are now in their early 30s—in other words, homebuying age. While their purchasing power may be affected by high inflation and house prices, they still represent a substantial market that can drive demand, which will keep wood prices high.
Overall Outlook for Wood Prices in 2022
Overall, the outlook is that lumber futures will continue to rise, most probably until around the second quarter of 2022. However, it is still unclear whether the prices will reach as high as they did in May 2021. But so far, as early as January 2022, prices have already increased to over $1,000 per thousand board feet.
So, what does this mean for lumber customers? If you have a DIY project planned out for the year, you better stock up on lumber now to avoid paying more if prices increase later.
On the other hand, if you are set on buying a home this year, make sure to tread carefully. Given sky-high inflation and potential increases in mortgages, you should assess your finances thoroughly before making such a big decision.
Stock Up on High-Quality Lumber Today
No matter what the lumber market outlook may be, you can trust us to supply the highest quality wood for your projects. Whether you are a homeowner planning a home improvement project or a home builder looking for new materials, our team is here to help you find the perfect lumber. Whatever you need, we can guarantee that we have it in our selection.
Peninsular Lumber is the premier lumber company in Tampa Bay. We offer the widest selection of lumber and building materials in the Tampa Bay area. We are your one stop shop for all your lumber and wood needs. If you want to learn more about our products, you can contact us at 813-875-8805.