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High cost of lumber delaying your home projects? Here’s when prices could come down

Lumber prices have skyrocketed during shortages spurred by the COVID-19 pandemic.
Lumber 04222021
A rail car loaded with lumber sits in a rail yard in Jackson, MIss., on Aug. 16, 2004. Lumber prices have surged during the coronavirus pandemic. (Rogelio Solis | AP Photo)

It’s not just toilet paper and cleaning supplies.

The COVID-19 pandemic has caused a number of shortages. And, while supplies have bounced back for many products, others — like lumber — are still scarce.

The pandemic-spurred lumber shortage has driven prices sky high — complicating things for the housing market and increasing the costs of construction and other projects. Some involved in the industry have offered forecasts about when the prices could come back down, while others have said it’s unclear.

The National Association of Home Builders says lumber prices have increased more than 200 percent since April 2020. The “price per thousand board feet” surpassed $1,100 in mid-April, up from less than $500 in June of 2020, the NAHB reported based on data from Random Lengths.

Bradford Gordon, the vice president of Moxham Lumber Company, told WJAC he’s never seen anything like it.

He told the outlet that last spring a standard two-by-four that sold for $3.39 now goes for $8.79 and a half inch of plywood that sold for $15.99 can currently sell for as much as $48.95.

So when could prices come down?

Experts and people within the lumber industry have offered varying projections.

Samuel Burman with Capital Economics, an economic research group, wrote Monday that the firm believes lumber prices will fall over the next 18 months.

Burman said the demand for lumber is expected to “hold up well for some time” but the firm believes supply should rebound and the price of lumber should sharply decline by the end of 2022 for two reasons.

The firm expects “domestic production to soar” — and says U.S. lumber imports could increase.

“For one, the progressive easing of quarantine measures should allow lumber mills to return to full capacity fairly soon,” Burman wrote. “In addition, the recent pick-up in hiring and higher trucker pay are likely to alleviate the current shortage of truck drivers, which should help resolve some of the logistical constraints.”

But Michael Goodman, director of specialty products at Sherwood Lumber, told Fortune its unlikely “we ever go back to levels we had prior to this boom” because, “demographically speaking,” the country will need more lumber in the coming years.

Stinson Dean, CEO of Deacon Lumber, made similar predictions to Fortune, saying if “the production factors remain that are limiting log supply, I find it hard to believe we return to historical price ranges.”

Gordon told WJAC he believes people work more on projects or home renovations during the summer but that he’s not sure when prices will come down.

But Steve Sallah — president and CEO of LBM Advantage, a lumber and building supplies buying cooperative — told CBS Newspath he believes building will slow down in the coming months as Americans spend more on traveling and entertainment as coronavirus infections drop.

“I think prices will ease a little bit in the summer,” he told the outlet.

Why are prices high in the first place?

High demand for construction and home remodeling during the pandemic coupled with coronavirus-related limits on production caused the shortages that pushed prices higher, the Associated Press reports.

At the beginning of the pandemic, shutdowns forced some sawmills to stop production while Americans stuck at home stocked up on materials for do-it-yourself projects.

Additionally, Fortune reports that many potential homebuyers turned to construction when home inventory dropped and the housing market soared amid record-low interest rates.

Now, the backlogged supply hasn’t caught up to the high demand, according to Fortune.

Effects of high prices

High lumber prices could have a negative impact on potential homebuilders.

While high demand, low mortgage rates and a low inventory of existing homes for sale could benefit potential builders, high lumber prices could limit their “ability to capitalize on the strong housing market trends,” analysts told the Associated Press.

Expensive building materials drive up building costs, meaning fewer people can afford to build a home.

“This price spike has caused the price of an average new single-family home to increase by more than $24,000,” the NAHB says.

High prices have also had an impact on remodeling or home-improvement projects.

“One of the very popular asks from us is can we build a screen porch addition or deck. Compared to two summers ago, a screened porch project, we are probably 15 percent or 20 percent more expensive,” Rick Matus, senior vice president at Case Architects and Remodelers in Maryland, told CNBC in February.

Heather Kirk, an interior designer, told CBS Newspath that her clients’ costs for projects have gone up.

“We’ve gotten examples of anywhere from double to three times what those materials were costing previously,” she told the outlet.