Everywhere you look, prices are going up, and many blame the COVID-19 pandemic. So when lumber prices take a nosedive, homeowners take notice. Are lower lumber prices a sign that it’s an excellent time to start home improvement projects? Let’s look at what’s going on with lumber prices and what it could mean for homeowners.
As many have figured out by now, the COVID-19 pandemic has affected many industries in various ways. The lumber industry was no exception. Early in the pandemic, there was a decrease in lumber demand as people stayed home and did not undertake new construction projects.
However, as the pandemic progressed, there was an increase in demand for lumber as people turned to home improvement projects to pass the time, not to mention construction projects by contractors and other professional builders. This led to a shortage of lumber and an increase in prices.
In early 2022, higher lumber prices meant that renovations, repairs, and new constructions were significantly more expensive, perhaps prohibitively, affecting home projects and prices simultaneously. But, then, inflation influenced prices, creating a perfect storm of circumstances that led to even higher lumber prices.
When COVID-19 hit, many sawmills slowed down or closed, anticipating low demand despite the increasing demand for housing. Oddly enough, sawmills didn’t see the need to increase production to meet the current market demands, so a market deficiency was inevitable. As a result, between April and September of 2020, the price of lumber rose 175%, according to the National Association of Home Builders (NAHB.
By early 2021, the price was an estimated $1,000 per thousand board feet, creating an additional 167% increase. Unfortunately, in May last year, the Framing Lumber Composite Price skyrocketed, reaching over $1,500 per thousand board feet. Ultimately, by February 2022, the price has tripled since August 2021, which is an unsustainable rate, and froze the real estate and construction industries.
Wood framing is necessary when building new homes, and approximately 9 out of 10 homes in America require around $30,000 to $40,000 worth of lumber. Consider the price of lumber, and you can see the massive impact the cost of lumber has on the real estate industry. For context, the average single-family home has risen by $18,000 between 2020 and 2021.
Currently, there is not enough lumber to meet demands, and the appetite for new housing shows no signs of slowing down. As a result, the current expectation is that first-generation homebuyers with no equity and renters in dense markets will be priced out of the housing market for the foreseeable future.
At the same time, bottlenecks in the supply chain and labor shortages have exacerbated the current issues. However, the Biden administration did not help the situation when they increased tariffs on Canadian lumber imports from 9% to 17.9%.
So far, in most of 2022, we’ve remained between a rock and a hard place. The lumber supply remains impacted by COVID-19, and the pandemic has indefinitely changed the American commerce landscape. We have a lumber shortage in the United States because we rely primarily on Canadian imports. Sawmills still aren’t running at the appropriate capacity, and the tariffs won’t drop until some time in August, and that’s not a guarantee.
According to some experts, lumber prices could fall below $600 per thousand board feet, which would be the lowest number this year, but still higher than pre-pandemic numbers. Still, several months ago, lumber was at its peak in price, nearly triple what it is now, and that’s something to celebrate. However, experts continue to surmise that lumber’s price will remain volatile.
Now that the pandemic is winding down, the demand for lumber has decreased, leading to a decline in prices; this could be good news for homeowners waiting to start home improvement projects. However, many contribute declining prices to rising mortgage rates, inflation, and the housing market cooldown.
As of mid-June, the lumber price has fallen below $600, leading to the lowest price since the pandemic began. Consumers are understandably concerned about the volatility of prices. Still, data support the assumption that lumber prices will stabilize in the coming months. Presumably, contractors and professional builders can expect the price to settle somewhere between $450 and $600.
It’s too soon to tell how these price drops will affect the real estate sector. Across the country, demand for housing is still high, and lower timber costs haven’t yet trickled down to house prices. However, in the following months, developers will be able to profit from these reduced costs, hopefully leading to more affordable housing.
Have you been putting off your home improvement projects since the pandemic? Like many other homeowners, you may have been waiting for lumber prices to drop before starting your project. Now that costs have dropped dramatically, it’s the perfect time to finish a project you’ve been putting off because of the rise in lumber prices.
Whether you’re adding a second story to your house, constructing a new deck, or attempting carpentry, the cost of your project will be far less expensive than it was a year ago or even three months ago. Of course, the cost of wood hasn’t dropped to pre-pandemic levels yet, but it is considerably cheaper than it was a year ago.
A deck is a great way to increase your home’s value while enjoying the outdoors. Now is the time to hire a reliable contractor if you’re in the market for a custom deck. We pride ourselves as the best custom deck contractor in Virginia at Prince William Home Improvement. We’ve been in business since 1986 and have a reputation for quality craftsmanship.
If you’re interested in a new deck or any other deck-related home improvement project, contact us for a free consultation. We’ll be happy to answer any questions you have and provide you with a free estimate. Even with the current market volatility, we guarantee our quotes on project costs for 12 months. In addition, with over 16,000 references from your neighbors, you may rely on our unrivaled warranties, professional installation, and high-quality materials.