Even with record-low interest rates, the American dream of owning a home is becoming further out of reach for a large portion of the population due to massive lumber price hikes.
Lumber prices have tripled over the past 12 months, driving up the cost of the average new single-family home by $35,872, according to new analysis by the National Association of Home Builders (NAHB) Economics team.
The lumber price surge has also added nearly $13,000 to the market value of the average new multifamily home, leading to households paying $119 extra per month to rent a new apartment. The rising costs of building materials across the board have only steepened affordability concerns for both homebuyers and homebuilders.
Soaring lumber prices can largely be attributed to the coronavirus pandemic. Many lumber mills halted or drastically reduced production last spring due to the onset of COVID restrictions. The housing market faired through the pandemic far better than expected and demand for new construction not only continued but increased. However, mills did not step up their production to meet rising demand.
Further, as Americans were spending more time inside their homes, there was a rise in do-it-yourself projects and home remodelings requiring lumber.
Tariffs on Canadian lumber imports into the U.S. market further exacerbated the situation.
NAHB says its top priority is to increase lumber production while reducing prices. On April 29, NAHB CEO Jerry Howard and senior NAHB staff held a virtual meeting with White House staff from the Domestic Policy Council, National Economic Council and the Office of the Vice President.
The association has engaged several congressional representatives over the past year to press for immediate action regarding the rising cost of lumber and ensure an adequate supply of lumber and other building materials.
Hoping to alleviate the situation and put a check on rising housing costs due to lumber price surges, NAHB has also reached out to lumber producers, members of the media, the U.S. Lumber Coalition, the Department of Agriculture, the Department of Commerce, the White House National Economic Council and the former Trump administration to help with the situation.
NAHB’s persistence has already led to the federal government taking action. In December, the U.S. Commerce Department slashed tariffs on Canadian lumber shipments into the U.S. from 20% to 9%.