The cash price of lumber fell to $770 per thousand board feet during the first week of July 2021, down 49% from its $1,515 all-time high during the week of May 28. The rise and subsequent fall in lumber prices was quick and dramatic, but lumber costs still remain well above their pre-pandemic range.
However, projected prices may remain higher than headlines suggest and price reductions may be slow to trickle down to builders. According to the National Association of Home Builders (NAHB), home builders and remodelers will get price relief once mill prices have substantially decreased for an extended period of time and/or stabilized, and this waiting period varies with the size of the builder and supplier. In addition, the shortage was a lot more widespread than just impacting lumber material: Approximately 90% of builders experienced a shortage and delay in appliances, windows and doors as well as framing lumber, plywood and OSB.
The NAHB estimated the significant spike in softwood lumber prices between April 2020 and April 2021 added nearly $36,000 to the price of an average new single-family home and approximately $13,000 to the market value of an average new multi family home. The association also estimated the increase in average home prices priced out more than 5.5 million households.
The pandemic pushed homebuyers to invest in new homes and home improvement projects, in turn drying up housing inventory and putting pressure on lumber supply from international sources. As the pandemic wanes, so have the direct stressors impacting this shortage: home improvement sales dropped 8.1% by May 2021, sawmills upped their production levels, and general U.S. lumber production increased by at least 5%.
Although the lumber supply still has a way to go before it will fall to pre-pandemic prices, industry insiders predict a few more price declines as mill production ramps up and more people go back to offices. One thing that could potentially deter these predictions is this year’s wildfire season in the Pacific Northwest and British Columbia, the epicenter of the North American lumber industry.