Wood has become a precious natural building resource that has become construction gold overnight.
Seemingly overnight, lumber has become the new oil. Thanks to the COVID-19 pandemic, the U.S. construction industry is seeing a massive building crisis: A deep lumber shortage that is driving prices sky-high and 200 percent higher than April 2020 supply costs, according to The National Association of Home Builders. A standard two-by-four that sold for $3.39 last spring is now retailing for $8.79. A half-inch of plywood is now going for as much as $48.95.
Today, a 1,000-foot lumber board that was $840 in September 2020 is running more than $1,300. Without questions, COVID-19 has been America’s worst house guest ever.
“You have the pandemic to blame,” Bob Vila.com’s Rachel Broughton writes.
It’s a natural American supply and demand problem. The cost of lumber and other building materials continues to increase because of a lack of supply. Meanwhile, the country is the midst of a home construction and remodeling boom ignited by the pandemic that left virtually the entire country housebound for a year and left millions of home construction sites idle and lumber mills quiet.
As a 28-year Alaska industry veteran notes, “During the pandemic, everybody wanted to build new decks. Everybody wanted to do home improvements. But with the lumber mills shut down, the surprise was just not there. …. In 28 years in the business, I’ve never seen anything like this.”
“This lag in construction combined with increased demand has had contractors playing catch-up,” Rocket Homes’ Andrew Dehan notes. “With growing new home construction comes more demand for materials.”
Samuel Burman with Capital Economics, an economic research firm, told the Charlotte Observer that the high demand for lumber is expected to “hold up well for some time.” Capital Economic projects an eventual decline in the cost of lumber, but not to the fourth quarter of 2022.
Meanwhile, the country’s lumber crisis has caused the average price of a new single-family home to spike by more than $24,000, per the NAHB.
That means all home improvement projects, from porch additions to new decks to storage sheds, are a much pricier home investment than they were just two years ago.
“One of the very popular asks from us is can we build a screen porch addition or deck. Compared to two summers ago, a screened porch project, we are probably 15 or 20% more expensive,” Rick Matus, senior vice president at Case Architects and Remodelers in Maryland, told CNBC.
And the long wait times for supplies will have many American homeowners celebrating birthdays before they get the materials for their home renovation projects. The average wait time for projects is between 6 and 18 months, according to Joe Harnois, interim president of the New Hampshire Home Builders Association.
Fortune.com reports 37% of American homeowners have delayed a home project because of the pandemic. The top reasons: Material cost (39%), lost income (35%) and material shortages (32%).
Which home improvement projects are most likely to blow your budget? Here are the U.S. Bureau of Labor Statistics’ list of the nine building materials that have experienced notable price increases over the last year:
- Softwood & Hardwood Lumber: 50% Price Hike
- Plywood: 19.2% Price Hike
- Iron (25%) & Steel (2.8%)
- Millwork: 7.9%
- Plumbing Fixtures & Fittings: 3.4%
- Hardware: 31.4%
- Wood Windows: 3.2%
- Paint & Painting Materials: 2%
- Cut Stone Products: 6.3%
Even while the country’s wood production hit a 13-year high in February, per Fortune, America doesn’t have the lumber on hand to meet its home construction and improvement appetite.
“Very simply: Supply can’t catch up to accelerated demand,” Michael Goodman, director of specialty products at Sherwood Lumber, told Fortune. “My family has been in lumber for over three generations, and seen many cycles of housing booms. We have seen ups and downs.
“But nothing compares to this boom in demand.”
And, unfortunately, the COVID-19 building boom is going to have many Iowa homeowners hitting the pause button on important home upgrades for a while.
“You don’t just turn on a resin factory like you turn on a faucet,” one industry veteran says. “It’s going to be a long six months.”