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Price of lumber hits record high, threatening construction timelines and home sales

construction site and bulldozzer
Posted at 3:52 PM, Feb 22, 2021
and last updated 2021-02-22 19:35:54-05

A national building industry group has appealed to President Joe Biden as the price of lumber skyrockets, threatening to slow down construction projects across the country and increase the price of existing homes.

“The extreme runup in recent months for the price of all categories of lumber has created a hardship for contractors that were called upon earlier in the pandemic to create spaces vitally needed for care of patients, social distancing of workers and the public,” wrote Stephen Sandherr, CEO of the Associated General Contractors of America, in Feb. 18 letter to Biden.

The price of softwood lumber has increased 73% in the last year, according to the U.S. Bureau of Labor Statistics’ Producer Price Index. The commodity reached a record high last week, and the forecast calls for the price to go even higher, according to industry experts. Last week the price was at $1,000 per thousand board feet; for comparison, in June 2020, the price was just below $500 per thousand board feet.

The AGC says their contractors are also still seeing the impact of former President Donald Trump’s tariffs of up to 24% on lumber imports from Canada. Pandemic shutdowns and resulting production slowdowns, plus last year’s devastating wildfires in the West, has decreased available supply of American lumber.

Contractors say they are not only dealing with an increase in lumber costs, but metal, too. The Producer Price Index shows the price of iron and steel scrap jumped 50.8% in the last year.

“Left unchecked, these rising materials prices threaten to undermine the economic recovery by inflating the cost of infrastructure and economic development projects,” Sandherr wrote.

Those higher costs are adding more than $20,000 to the price of an average new build of a single-family home, according to the National Association of Home Builders.

The increasing costs of building a new home may be impacting the price of existing homes. The National Association of Realtors reported last week the average national sale price of an existing home jumped 14.1% from a year ago, and is now about $304,000.