The US housing sector has endured significant turmoil since the outbreak of the coronavirus pandemic in 2020. Calls for social distancing and the lockdown kept construction projects at a minimal low. And building was deemed unnecessary-with so much to bother about, of course! Things are now changing, and home construction projects are now taking a toll on lumber industries.
What drives lumber prices?
Two main aspects affect lumber prices; these are lumber inventory and housing starts. The most significant driver of lumber prices is the US housing market. It requires a steady import flow and adequate levels of finished lumber, plywood, and other construction materials. The market’s ability to produce lumber is also crucial. Timber manufacturers should make and stock products rightly to cater to the demand in the construction sector.
How have high lumber prices crippled home construction?
When the Covid 19 pandemic set in, no one expected what we are experiencing now. Rail cars would still ferry lumber from Canadian mills to lumber firms in America. However, things happened so fast, and countries closed borders unexpectedly.
Check out the effects;
- Lumber shortages
The demand for various products spiked to unimaginable levels as the virus continued raging. As we all know, US home construction heavily relies on trade with Canada, which supplies a significant percentage of lumber to the US.
With safety restrictions due to Covid 19, it became impossible to import lumber. Moreover, the increasing demand forced builders to pay more for building materials. Shutdowns at sawmills have led to an extensive backlog, which has affected the National Wood Products company and many other timber businesses.
- High cost of other building materials
The shortage also affected the cost of other building materials like copper, aluminum, and gypsum- whose prices also soared. Still, this caught builders by surprise, and many had to endure hefty costs to complete projects.
- Stalled projects
With the rising lumber cost, most builders are unable to afford adequate construction materials for their projects. Some of the incomplete houses have to wait a little longer. Also, the demand for new homes outstrips the supply since there’s not much construction work going on. Although Plywood & Interior Surface Specialists have assured clients of the availability of some products, one thing is for sure-higher prices.
- Fewer new homes on sale
The high cost of lumber and other construction materials limit builders in many ways. They are now forced to build fewer homes and raise the prices to cater to the high cost of materials. Homebuyers on a budget have no choice but to negotiate building materials and go for cheaper options or smaller non-luxurious houses. Also, home builder are now shifting focus to suburbs offering cheaper land rates.
The bottom line
The Covid 19 pandemic has significantly affected the construction industry. The high cost of lumber and other building materials in the US is worth worrying about. As a result, builders have no choice to raise housing costs to cater to the increasing costs. On the other hand, homebuyers have fewer housing options but keep hoping for better days ahead.