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Lumber prices hit record levels putting a strain on homebuilders and consumers

NAHB: Lumber prices up 250% since last spring
Lumber prices hit record levels impacting homebuilders and consumers
Posted at 5:06 AM, May 04, 2021
and last updated 2021-05-04 08:42:30-04

COLORADO SPRINGS — Lingering supply chain issues combined with a red hot housing market has made the price of lumber skyrocket. Those costs are impacting homebuilders and are ultimately being passed on to consumers.

Lockdowns last year took a toll on the lumber industry including sawmills that didn't operate for months. Suppliers didn't have time to build up their stocks during the winter as they normally would. It drove prices up.

"We use a lot of it. Well, it's really the biggest component of the house. You take for instance a deck or a fence it's all lumber. So the prices of those have really gone up. The price of a project could triple. It makes the cost of a house go up quite a lot," said Vanguard Homes Managing Director Mark Long.

The National Association of Home Builders is hoping mills will soon ramp up production because the shortage of lumber has caused prices to go up nearly 250% since last spring.

With lumber being a key component of a house, basically the bones of the home, this price spike is being passed on to home buyers. The NAHB says the price of an average new single-family home has increased by more than $24,000. In Colorado, some experts say that number is closer to $36,000.

"Housing really affects everyone. Everyone lives somewhere. There's good news and bad news. If you are in an existing house and you bought before all this happened you just got a huge free bump in your equity. You've got a ton of money in your house. But the problem is if you want to move up, sell and move, that's hard right now. It's going to be hard getting a new home and even hard getting a resale. So, it's impacting the way people live," said Long.

According to market experts at Fastmarkets between 2015 and 2019 lumber traded at $381 per one thousand board feet. In April of this year it reached a record $1,104 per 1,000 board feet.

Meanwhile, other construction materials like insulation, stucco, and concrete are also going up in price. At the end of the day, the cost is being passed on to consumers.

"A regular piece of OSB plywood at the beginning of last year was probably 20 bucks. I saw that one of our stores the other day it was 47 so it was more than doubled," said Construction Superintendent for Steamatic of Virginia Marc Aguilar.
"Every supplier has increased their costs on us. Even buying sand and gravel and cement to make the concrete, all of those costs have also increased," said Thomas Tekesky of American Fence Company.

Experts believe some of the contributing factors to the price spike are the COVID-19 pandemic, an increase in home renovations, do it yourself projects, and people purchasing bigger homes. Mills are having trouble meeting the demand for lumber, trucking delays and worker shortages at lumber yards.

The hope is the cost of construction materials including lumber will come back down by the end of the year as the workforce and production catches up. News 5 will continue to track this story for you in the months to come.