Lumber Prices See Significant Increase
There probably isn’t a single industry that wasn’t in some way affected by the global COVID-19 pandemic – either in a positive or negative way. For the sanitizing and toilet paper industries, it proved a financial boom; however, for many other industries, it decreased business as our economy slowed and everyone halted to figure out the best solution. It was no different for the construction industry. As many people paused or entirely canceled construction plans, there was a decrease in the amount of construction projects being started or completed, and that resulted in a number of suppliers slowing or stopping production in order to see what would happen with the industry. Then, contrary to predictions, as we moved forward through the pandemic, residential construction picked up more than expected, leaving manufacturers rushing to increase their production. As residential construction projects continued at record pace, many manufacturers that had slowed production had to reverse course.
The lumber industry was one most impacted by the pandemic shutdown and then the retail construction boom. As mills closed down due to the social distancing measures enacted by local governments, there was an unexpected increase in the demand for lumber – from DIY housing projects to big-box retailer projects, residential construction saw an uptick, rather than declining. This resulted in a disruption to the supply/demand equilibrium. Mills are now trying to catch up to orders, which in some cases are being placed without a delivery date or price. Despite COVID-19 being one of the largest factors, lumber tariffs and international trade have also exacerbated the inflated lumber prices.
In July of 2018, we saw a decrease in the prices paid for softwood lumber – the second decrease occurring that year. Despite this, the average price for softwood lumber was the highest on record since 1997, having gone up 22.8%. Exactly two years later, in July of 2020, that record was broken once again as we saw the price for paid goods used in residential construction increase by 1.9%. According to the Producer Price Index (PPI) report released by the Bureau of Labor Statistics, it is the second consecutive monthly increase since the index declined three months straight by a total of 5.4%. The price for lumber is now $934.5 per thousand board feet, jumping 50% between April and July of 2020.
Moving forward, we all are going to come out of this pandemic with lessons learned and plans prepared should a scenario like this ever arise again. In the meantime, Tri-North is here to help and is equipped to propose alternate solutions during pre-construction. Having an experienced building partner is crucial during volatile times like this, so we can assist in providing creative, transparent solutions to keep your project under budget and on schedule.