High wood prices: what can be done to bring them down?
Soaring lumber prices have increased construction and housing costs, analysts said.
Lumber prices continued to rise in response to supply shortages caused by the COVID-19 pandemic.
The scarcity of lumber coupled with increased demand during the pandemic drove up costs, which in turn increased construction and housing costs and left government and industry officials to struggling with how to bounce supply and cut costs.
Between April 2020 and April 2021, the National Association of Home Builders said the “price per thousand board feet” increased by almost 250%, from $ 350 to $ 1,200. Prices then surpassed $ 1,400 in early May and have been rising steadily since.
High lumber costs have increased the price of a single-family home by about $ 36,000, according to the NAHB. This is the price of “millions of middle-class households out of the market at a level they could previously afford.” It also added almost $ 13,000 to the cost of an average “new multi-family” home, meaning that the rent for a new apartment has increased by about $ 119 each month.
What are we doing to bring down the price of wood?
The NAHB said it called for “swift action” from President Joe Biden’s administration and other officials, and discussed soaring timber prices in late May with US Secretary of Commerce Gina Raimondo.
“Raimondo and NAHB CEO Jerry Howard discussed the possibility of convening a summit that would include representatives from the US government, the timber supply chain and the residential construction industry,” a- he declared.
NAHB Chairman Chuck Fowke said in a press release that Raimondo acknowledged that she and Biden were concerned about the effect of high lumber prices on the country’s economy.
“We take these issues seriously, and my staff and I are committed to continuing to work with all stakeholders, including reviewing relevant data and performing analysis to identify targeted actions that government or industry can take to deal with supply chain constraints, ”Raimondo said, according to the NAHB.
Some GOP lawmakers have criticized Biden for the high costs of timber, accusing him of “declaring war” on construction work and not taking enough action, Fox Businesses reported.
“Lumber prices are a problem that has many causes, from the economic complications of the coronavirus pandemic to difficult trade issues with Canada. Biden has shown that he is unwilling or unable to tackle these obstacles, ”Ohio Rep. Bob Gibbs said in a statement to Fox News.
But Biden said in remarks in late May that restarting the economy was not like “flipping a switch” and that there would be supply chain issues on the way to “steady growth.”
“In the coming weeks, my administration will take action to combat these supply pressures, starting with building materials and transportation bottlenecks,” Biden said.
Some groups have urged Biden to remove tariffs on lumber and steel imposed during President Donald Trump’s administration, CNN Business reports. A White House spokesperson told CNN Business that the Biden administration is following “all avenues that could help reduce bottlenecks and strengthen our economic recovery” and will continue to review trade policies of the Trump era.
“Tariffs are one tool in the toolbox to support American workers and American industry,” the spokesperson said, according to CNN Business.
What drove the prices so high?
Some sawmills were forced to close at the start of the pandemic, limiting supplies of lumber.
At the same time, many Americans stuck at home due to COVID-19 restrictions have sourced materials for do-it-yourself projects, and the demand for construction or home improvement projects has increased.
Additionally, Fortune reports that many potential buyers opted for construction when record interest rates caused the housing market to boom, further increasing demand.
“It was the perfect storm,” Kari Doll, manager of a lumberyard in Montana, told the Bozeman Daily Chronicle.
The decrease in supply combined with the increase in demand pushed up lumber prices. Now, the late supply has not been able to catch up with the high demand and lumber prices have remained high.
Experts have offered various projections for when prices might come down, with some saying they might ease in the summer and others saying it’s not clear when or if prices will return to what they are. were before the boom.