Lumber Prices Are Staying Sky High — Even If The Pandemic Ends Soon
ARI SHAPIRO, HOST:
The pandemic has some Americans thinking about remodeling their home or even building a new one. Interest rates are low, and many who've held onto their jobs are sitting on some extra money. But there's a catch - the price of lumber. Demand is way up, supply is down, and the price is still going through the roof. Frank Morris of member station KCUR reports.
FRANK MORRIS, BYLINE: A narrow strip of grass between two small houses in Independence, Mo., marks the boundary between pre- and post-COVID lumber prices. One house is just under a year old. The other is under construction. Mark Schroer from Habitat for Humanity is standing between the two and says the distance is small, but the price gap is huge, mostly because of one commodity.
MARK SCHROER: What lumber has to do with this is about 30 to $35,000 in difference between the two buildings.
MORRIS: Because since this time last year, the price of lumber has roughly tripled, and it's still going up.
SCHROER: It's an everyday concern for me. It's - every time I called a lumber yard, they're telling me about a price increase. I'm getting emails and letters from my suppliers about price increases. It's ongoing, and it's very real.
MORRIS: Schroer isn't alone in scrambling to cover the costs of lumber.
DUSTIN JALBERT: You know, the whole supply chain is in chaos right now.
MORRIS: Dustin Jalbert tracks the lumber business for Fastmarkets.
JALBERT: You've got a positive demand shock and a negative supply shock. And COVID is really kind of at the epicenter of all this.
MORRIS: Jalbert says supply took a hit last spring when saw mill operators were staring down what look like maybe the worst recession in generations.
JALBERT: In the initial stage of the pandemic, everyone kind of thought the sky was falling. In the industry, everyone thought housing was going to take a huge hit.
MORRIS: So some mills cut production, dropping supply by up to 30%. But right about then, demand took off.
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MORRIS: First, the do-it-yourself home improvement boom took hold. Then crews started building more houses and using still more scarce lumber. Then the big second wave of COVID cases cut into production at U.S. lumber mills, and those mills are still running with fewer workers than they had before the pandemic. Now the building season is really kicking into high gear across most of the U.S., and the lumber shortage isn't the only thing driving up construction costs. Will Ruder runs the Home Builders Association of Greater Kansas City.
WILL RUDER: Garage doors are up 11%. Insulation is up 25%. The lead time for windows has gone from three weeks to 16 weeks.
MORRIS: Ruder says the shortages are tacking months onto the time it takes to build a house and driving up costs. And he says that for every $1,000 price increase, nationwide, more than 150,000 potential buyers are being priced out of the market.
RUDER: So when we're talking about 20 to $25,000 increases in lumber, extrapolate that to the number of families that are going to find themselves on the outside looking in from a new home construction standpoint.
MORRIS: And that is exactly what's happening. In February, sales of new single-family homes plummeted 18%. New housing starts dropped 10%. Meantime, lumber production is back up to about where it was before the pandemic. So the lumber shortage and record high prices should ease within a few months, which would be welcome news for everyone from do-it-yourselfers trying to tackle a backyard project to contractors building brand-new homes.
For NPR News, I'm Frank Morris in Kansas City.
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