Photo courtesy of The Hustle

From The Hustle

Wood is typically used for building roofs. Now it’s known for blasting through them.

Lumber prices are up nearly 260% since April 2020, following a perfect storm of surging demand and diminished supply.

And it all started with a simple backlog…

At the start of the pandemic, sawmills anticipated weak demand and limited production by up to 30%. To their surprise, demand turned out stronger than ever:

  • DIY boom: While the US economy shrank 3.5% in 2020, spending on home improvements and repairs grew 3%+
  • Low interest rates: In December, US new housing starts hit a 14-year high

Despite wood production hitting a 13-year high in February, supply hasn’t caught up with demand — and now ~70% of builders are raising home prices to slow demand down.

The result is a $24k+ increase in the average price of single-family homes since April 2020.

European beetles are now coming in clutch

Not those European beetles. A literal beetle infestation across Europe is boosting logging there, and Europe’s share of US lumber imports reached a record high of 13% in 2020.

Those imports are critical to the US lumber supply as British Columbia has reduced production by over a third in 5 years.

In conclusion… (We wanted to end this piece with a joke about lumber, but we just couldn’t think of any that wood work.)

7 COMMENTS

  1. Sorry, not buying it. Corporations are taking advantage of an opportunity to profit, nothing to do with bugs. If your assumptions are correct material pricing will come back dow to pre Covid-19 within the next year. My bet is any corporation and government related to this industry will continue to keep prices elevated now that people are comfortable taking it in the back end . I like many others are opting out of doing planned projects. Starting to realize I don’t really need to do the upgrades or changes I were planning. My bet is there will be a glut of materials and corporate earning will fall and corporations will raise prices again to make money and keep shareholders happy. All about profit. Covid and Bugs, not buying it

  2. Builders are not increasing prices to slow demand. Builders are raising prices because the cost of goods is more expensive for them and they are maintaining their profit margins.

  3. It is typical flaming liberal playbook; create a false crisis to justify raising prices on everything, then create a smokescreen to keep them up when crisis has abated. How do you keep falling for it?

  4. People this is the USA.When ever people are at there worst the government and corporate people takes more and more.They raise gas prices when every they feel like gros keeps going up,ins keeps going up and so on.I have learned in life these people could care less about the people as long as they can put a dollar in their pocket.They would take the last bit of food from your child’s mouth.

LEAVE A REPLY

Please enter your comment!
Please enter your name here