Column: Lumber prices expected to stay high through 2022
What commodity has tripled in price over the past 12 months? What commodity is in an uptrend? What commodity is showing a rising tendency and is extremely desirable at the moment?
We expect the hot lumber market to persist, keeping both prices and volatility elevated. The cycle that we are in is here for the foreseeable future.
Lack of supply and the high demand in the marketplace is the driving force of prices. We are currently in an 11-month lumber boom, sparked partly by a pandemic and related surge in home construction that caught both homebuilders and lumber producers off guard.
So many of you have gone to purchase lumber over the past few months for your DIY projects and you probably found yourself paying high prices, or even possibly putting off the work in hopes of lower prices.
This will not make you feel any better, but it is even worse if you are building a new home, since expensive lumber is adding tens of thousands of dollars to the price of building the average house.
Can we blame something? Yes, we can blame the pandemic, closing of lumber mills, and tariffs and, oh, yes, we can blame government.
Soaring lumber prices that have tripled over the past 12 months have caused the price of an average new single-family home to increase by $35,872 and up, according to the National Association of Homebuilders. The average price this past week for a framing lumber package was $1,446 per thousand board feet. One year ago the price was $441 per thousand board feet.
Lumber prices “softened” a bit recently, as demand slowed. The market indicators thought this was due to more travel, and more businesses and activities reopening, so homeowners slowed the spending on home renovations. Still, most analysts expect lumber prices to remain elevated through 2022 due to supply-chain disruptions and as very few new mills are operating at 100 percent.
One would think that the rising lumber prices would seem to be a good incentive to restart and open so many closed mills, but it is not that easy. There is not enough labor to work the saw mills that are open at full capacity, let alone find labor to open a closed mill.
And then we have a truck driver shortage, plus higher diesel fuel prices, which also means that it’s less profitable for timber owners to ship logs to saw mills.
That leaves domestic production of lumber lagging behind demand, with prices rising as an inevitable result.
What about imported lumber? The U.S., after all, is not the only country to grow and harvest trees. I believe government trade restrictions stand in the way of alleviating high lumber prices in the U.S.
With the surging lumber prices that are already adding an average of $36,000 to the construction cost of a new home, the administration is moving forward with plans to double tariffs to over 18 percent on lumber imported from Canada.
I do not have the answer, but I feel the government is mistreating the lumber market, and the impact of what is happening is falling on consumers. What our government leaders, along with their irresponsible and careless policies, have done to the lumber industry is mind-bogglingly thoughtless, ludicrous, absurd and irresponsible, and they are breaking the economy.
Sandy Griffis can be reached via email at email@example.com or by phone at 928-778-0040. Follow YCCA on Instagram at @yccapresott.
Griffs is the Executive Director of Yavapai County Contractors Association.
Yavapai County Contractors Association