Lumber prices soar, causing many workers to hold off on construction
Many people purchased new homes during the pandemic, fueled by low-interest rates, the freedom to operate from home, and, of course, the desire for personal space in the midst of a raging global pandemic.
However, the rules of supply and demand were not inactive at the same time. Lumber becomes economically unfeasible, increasing the cost of every new building.
According to the National Association of Home Builders (NAHB), the average price of a family home has risen by $24,386 since April, owing primarily to a disruption in raw materials as lumber mills shut down at the onset of the pandemic for safety purposes. Lumber rates have risen by almost 200 percent since they reopened. It seems that homebuilders are now taking advantage of this price surge.
According to new data from Zonda, a global housing data portal, at least 70% of builders are deliberately raising home prices in the hopes of slowing demand and giving them more time to procure lumber and other resources. They’re also limiting the number of transactions in order to align orders and manufacturing capability.
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“Though builders continue to see strong buyer traffic,” NAHB Chairman Chuck Fowke told real-estate news site HousingWire, “recent increases in material costs and delivery times, particularly for softwood lumber, have depressed builder sentiment this month.”According to Fowke, lumber rates could fall as COVID-19 vaccinations begin to be distributed, allowing more lumber mills to reopen safely.
The traffic listed by Fowke is largely due to mortgage rates being at record lows in December, and given the surging lumber prices, housing costs are also at record highs. According to a recent study from Redfin, a real estate brokerage, the average home selling price reached an all-time high in March, rising 16 percent year after year to $331, 590.
