Bulletin Board Magazine 2021 Volume 3

NAHB

Lumber Prices Ease Slightly but Remain FARABOVE NORMAL by Michael Kurpiel, Carter Lumber

Michael Kurpiel

Though lumber prices fell significantly in July, prices paid by builders for lumber remain stubbornly high and far above historical norms. These high prices are slowing the residential construction industry. Despite recent declines, framing lumber prices are still 11% higher than they were in April 2020. Over the same period, the price of softwood plywood has increased roughly 50%, and the price of OSB has gone up by more than 110%. Since lumber prices began to rise in the spring of 2020, NAHB has been educating the public and policymakers about how rising lumber and building material prices are harming home builders, home buyers and the economic recovery. In mid-July, NAHB Chairman Chuck Fowke participated in a White House summit on the home building materials supply chain. Fowke joined other industry stakeholders in a discussion of potential solutions to production bottlenecks. He stressed in the meeting that it is imperative that lumber mill producers boost production in order to meet rising demand. NAHB has reached out to virtually every member of Congress on this issue and has been speaking to the public through national media outlets. NAHB leaders have appeared on CBS This Morning and numerous times on Fox Business News. NAHB has also been featured in Bloomberg, CNN Business, Fortune,

CNBC and scores of local media outlets across the nation calling for action to address rising

prices and supply shortages. Effects on Consumers

The high costs have had a dramatic effect on home buyers and renters. Changes in prices for softwood lumber products that occurred between April 17, 2020, and July 8, 2021, have added $29,833 to the price of an average new single-family home, and $9,990 to the market value of an average new multifamily home, according to NAHB’s latest estimates. The increase in multifamily value, in turn, translates to households paying $92 per month more to rent a new apartment. Prices to home buyers have gone up somewhat more than this due to factors such as interest on construction loans, brokers’ fees, and margins required to attract capital and get construction loans underwritten. The rising prices have squeezed many lower- income households out of the market for new homes and made it harder for them to find affordable rental housing. The Producer Price Index for softwood lumber (seasonally adjusted) decreased 29.0% in July, which was the largest monthly decline since tracking of the series began in 1947. But prices remain well above normal.

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