GROWTH PAIN: Rising cost of lumber adds stress to construction boom
The cost of lumber has increased nearly 300% since last spring, when COVID-19 closures silenced sawmills in North America, reducing future supplies. This and increased demand for housing, especially in places such as the Highland Lakes, has resulted in rising housing costs across the country.
According to the National Association of Home Builders, soaring lumber costs add about $ 36,000 to the price of an average new single-family home. Construction costs for apartment complexes and multi-family dwellings add about $ 119 to monthly rents.
“We really feel it,” said Dan Burdett of Burdett Homes, a custom builder in the Highland Lakes.
The company’s teams only attack a handful of houses – five to ten – per year. It feels a bit more of it than the high volume builders who can buy materials in bulk and possibly get better prices.
“A year ago the cost was about $ 350 per 1,000 board feet for lumber,” Burdett said. “About a month ago it jumped to $ 1,711. But today (May 28), it’s around $ 1,400. I feel like we got off the top, but it’s still high compared to where we were last year.
Concerns about the lumber shortage recently reached the floor of the United States Senate and are part of an ongoing tariff debate between the United States and Canada.
In mid-May, during congressional hearings on rising lumber prices, U.S. Trade Representative Katherine Tai said the U.S. and Canada were discussing eliminating a duty 9% customs duty on Canadian softwood lumber products, which are used in residential construction.
Initially, when imposed in 2017 as part of the recently negotiated North American Free Trade Agreement, the tariff averaged 20% on lumber imports from Canada. It was brought back in December 2020 to its current level. When the tariff was imposed, Canada called it an “unfair and punitive duty”.
A spokesperson for the Canadian Department of Commerce told reporters shortly after Tai’s testimony that America’s northern neighbor “believes a negotiated deal is possible and in the best interests of both countries.”
It is not just the price of lumber and wood products that are going up.
“That’s it,” Burdett said. “Steel has doubled since October. The metal roof is in place. Spray insulation for the home, it has increased by about 50 percent. Almost everything you need to build a house has gone up in price.
The price volatility of steel products in the United States is higher than ever since the Great Recession of 2008, said David Logan, senior economist at the National Association of Home Builders.
“In the past three months, prices have climbed 22%,” he said in a statement. “Perhaps more concerning than the rise in prices is that the pace of price changes has accelerated each of the past nine months.”
Ready-mix concrete prices, which have also risen, have shown “unusual volatility,” he added.
The closure of sawmills is not the only reason for a drop in supply and a rise in prices. During the COVID-19 pandemic, many homeowners had more free time and extra money that could normally have been spent on travel.
“People were sitting at home and getting a good amount of money to sit there, and they were bored,” said Matt Winsborough, president of the Hill Country Builders Association. Winsborough Construction Inc. and the association are both located in Marble Falls. “They go to Home Depot and buy lumber to build a patio or shed. The wood is bought but not produced. This set off a chain reaction to a shortage.
The remodeling market grew by 7% in 2020, alongside an increase in DIY projects that are not reflected in the remodeling numbers but still add to the demand for wood products.
“I think it’s still a strong market,” Burdett said. “We always think we paid too much, but in 10, 15, 20 years you don’t remember how much you paid, but you remember all the good memories and times that you had.”
This story is part of a series on post-pandemic growth in Highland Lakes. The “Growing Pains” stories will be posted throughout June on DailyTrib.com. The series debuted in the June edition of The Picayune Magazine. Other stories can be found here and here.