Although lumber prices have begun to fall recently, home builders — who have been paying more for wood for months — are not in the clear quite yet, with the expectation that it will take time for the cost savings to be felt.
Lumber prices are almost half of what they were a year ago but are still higher than they were before the pandemic. In the past year prices rose by over 350 percent. As of the end of June, lumber futures were trading at nearly $700 per thousand board feet, compared to a peak of $1,670 in May and $422 in February 2020, pre-pandemic.
The skyrocketing lumber costs during the pandemic added almost $36,000 to the average new single-family home and $13,000 to the price of a multi-family home since April 2020, the National Association of Home Builders estimated.
The pandemic sparked a boost around home buying, building and renovating, which in turn fueled strong demand for lumber. Lumber prices rose to record highs while mills struggled to keep up with demand. Now that some of that production is catching up to demand, pricing is evening out – although there are still delays.
An April 2021 survey from the National Association of Home Builders found that 47 percent of builders began including price escalation clauses in their sales/construction contracts, while 19 percent delayed building during the cost spike.