How Lumber Prices Are Affecting Home Affordability & Prices
Q: Gerald, I have been a builder for over 20 years and the price of materials and labor are crazy right now. Do you think the price of lumber and other building materials will go down anytime soon? Joe, Point Pleasant, NJ
A: After several months of price declines last spring and summer, lumber prices are skyrocketing once again. Lumber prices have almost tripled in the last 4 months. In fact, the latest wave of rising lumber prices adds almost $20,000 on average to the price of a new home which in turn reduces housing affordability especially for first time home buyers. Soaring lumber prices are unfortunately part of a bigger supply chain disruption problem caused by waves of the pandemic globally and an unusually strong wildfire season last summer in the western US and British Columbia. Sawmills also miscalculated demand at the beginning of the pandemic and cut production when in hindsight they should have increased production to meet even bigger demand. We live in an interconnected world so the price of building materials is not something any one of us can directly control, but I expect lumber and building material prices to fall as the effects of the pandemic continue to recede over time. Thanks for your question, Joe.
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