How does the real estate market affect lumber prices?
The housing industry is a significant player in lumber prices. The spinning demand for homes and wooden furniture means that builders constantly need to buy construction materials. When we talk about the housing industry, the purchase of timber products can be separated into two parts, one of which is related to lumber prices for home building.
- The new house construction market.
- The remodeling market
The price of lumber is volatile because so many factors are at play. Some of the factors affecting lumber prices in the home-buying market include:
1) Lumber Prices for Home building: Number of People Looking for Homes
The United States housing market is vast and fluctuates a lot. More builders enter the market when more people start looking for new homes. It leads to more demand for lumber, which leads to higher prices.
2) Number of Home Improvement Projects Taking Place
When more people upgrade their kitchens or do other renovations, it leads to higher demand for lumber and higher prices. If a few upgrades occur, lumber demand and wood prices fall.
3) Natural disasters
A natural disaster like a hurricane can cause a lot of damage to property and take down hundreds of thousands of trees, which are used in building repairs and reconstruction. It drives up lumber prices while a massive demand for the product exists.
4) Household Formations
The number of new homes being built directly results from how many people marry and create families. When more people marry, the number of new household formations increases. It increases the demand for lumber, which drives up the price.
5) Energy Prices
As the price of energy like oil rises, the cost of transporting timber also rises. Furthermore, when people pay more for gas and heating oil, they become reluctant to spend on home upgrades and remodeling projects that use many lumber products. It drives down the demand for lumber and, therefore, its price.
6) The Global Economy
During economic expansion, people often build new homes or remodel existing ones to exploit the growing economy by increasing their wealth and purchasing power. As a result of this increase in demand, the lumber market is often boosted by people building new homes or remodeling their existing ones.
7) Size of the Home
It affects lumber prices because it impacts the characteristics of the homes being built. For example, if more people are building homes with smaller footprints, there’s less need for lumber products. Alternatively, if more people are building larger houses, lumber products like planks and boards will have a greater demand.
8) Customer’s Preference for Wood
Mostly, they favor treated woods such as cedar, redwood, and pressure-treated lumber as they are cost-effective in the long run and do not decay quickly. They also provide strength, durability, and resistance against moisture. In turn, the prices of lumber made from these types of wood increase.
How to Save on Lumber
Asking for prices from multiple home builders and comparing them will give you a good idea of whether or not you’re paying too much. It’s also a good idea to ask them to include everything in the quote, including land costs and permits. Also, ask about their business licenses and if they have A+ ratings.
You can also find individual builders and get information about their business plans, team, work history, and customer satisfaction.
Visit Peninsular Lumber for all Your Lumber Needs
Houses are one of the most important purchases we make in our lifetime, and the cost is not small. That’s why we are here to give you some great information on what affects lumber prices and how to save money on lumber.
Visit Peninsular Lumber today for all your lumber needs in Tampa Bay!