How are Rising Lumber Prices affecting Home Building Projects?
Lumber prices have been soaring since the pandemic, given the unexpected surge in home improvement projects and home buyers. While many assumed that the housing market would slow down due to the recession from COVID-19, the opposite happened. The demand for homes skyrocketed!
So, much so that the inventory of existing homes reached a shortage. This trend has led to an increase in the number of new homes for sale. Unfortunately, the rising lumber prices have also resulted in higher costs to build a home. So, whether you opt to buy or build a house, you will need to spend more. Get to know more about how lumber prices have affected custom home building below.
Impact of Lumber Prices on Home Construction Costs
In May 2021, the price of lumber reached a record-high of over $1,500 per thousand board feet. According to builders and construction companies, this massive spike has pushed higher prices for homes to consumers.
Based on estimates from the National Association of Home Builders, the increase in lumber prices has added about $35,872 to build a new single-family home and $12,966 to build a multifamily home. It has also caused rental rates to skyrocket, compromising housing affordability for many people.
Homebuilders have tried to temper the market by delaying construction due to high prices, but this has not necessarily worked since single-family housing starts continued to increase. Additionally, the housing supply was at extremely low levels, so builders had no choice but to ramp up production.
After the massive spike last spring, lumber prices later dropped to almost half of what they were during the peak due to easing lockdowns. But unfortunately, this price reduction did not necessarily translate to lower home building expenses since builders were still grappling with other market issues like land prices, labor shortages, and rising material prices.
State of Lumber Prices Today
Fast forward to 2022, and the situation persists. While lumber prices relaxed and normalized in the latter part of 2021, they have risen again due to the sanctions against lumber exporter Russia caused by the ongoing Russia-Ukraine conflict. This time, the National Association of Home Builders estimates a jump of about $19,000 in the price of building a new home.
Currently, the cost of lumber has dipped below the $1,000 mark as supply is picking up. However, other problems remain. For example, there seems to be a shortage of trucks—the preferred form of transport for shipping lumber. So, even though sawmills have plenty of lumber, they cannot ship it.
Overall, experts are still unsure how the lumber industry will progress. Some believe that the situation may ease as supply and demand balance due to the increased interest rates. However, this is only one of many possibilities. With so many factors at play, it is hard to say how prices will change in the coming months.
On top of all these, lumber is not the only building material whose price has increased since the pandemic. Other materials like concrete, metal, steel, paint, and gypsum have also seen significant price increases, affecting overall home building costs. If you plan to build a home soon, it will be more important than ever to plan your budget thoroughly.
Plan Your Next Homebuilding Project Today with Peninsular Lumber
With all the lumber and housing market uncertainties, it has become more challenging to build a custom home. From the volatile lumber prices to the external issues, there are many factors to consider when building a house.
However, the one constant will be Peninsular Lumber, regardless of the circumstances. We are your one-stop shop for lumber in Tampa Bay, so you can always count on us to supply you with the highest-quality lumber. If you plan to build a home soon, don’t hesitate to get in touch with us today at 813-875-8805.