Breaking News

Splintered lumber market causing shortages, major price increases

EASTLAKE, Ohio — Whether you are a professional homebuilder or a weekend warrior working on do-it-yourself projects, there is one material found in just about any project: lumber. The past several months, lumber has been in short supply, forcing construction firms to adjust and prices to skyrocket.

Fueled by a combination of the COVID-19 pandemic, disrupted supply chains, tariffs on Canadian lumber and a surge in home construction and remodeling, the prices of every day framing lumber have ballooned over 80% since the spring. In some cases, prices have more than doubled.

For some contractors that spoke to News 5, the shortage has increased project lead times and higher material costs. For Painesville-based Jemm Construction, the lumber shortage has forced home designs to be more efficient and purchase orders to be made sooner. By doing so, co-owner Mark Maltry said the company’s numerous projects have largely remained on schedule.

“If we’re designing a roof that is, let’s say, 19 feet, and we’re ordering a 20 foot piece of trim, we’re wasting a foot,” Maltry said. “We’re designing to eliminate some of that waste to combat the lumber cost.”

Maltry said his company is also adopting the use of alternative materials as well.

The lumber market traditionally experiences at least one price surge a year, typically around the peak of the construction season. However, in 2020, Maltry said lumber prices — as well as the prices of other common construction materials — have experienced several upward swings.

The lumber industry determines prices using a volumetric formula called “board feet.” For example, the ubiquitous “stud” piece of lumber — an eight foot long piece of 2×4 — is 5.3 board feet. In the beginning of April — during the peak of COVID-19 lockdowns — the price per thousand board feet hovered around $300, dipping to its lowest point in more than three years.

2020 lumber prices
Source: TradingEconomics.com

However, by July, the price per thousand board feet had more than doubled. And on Sept. 17th, the price per thousand board feet had more than tripled, topping out at more than $940 per thousand board feet.

Lumber prices 2010-2020
Source: TradingEconomics.com

In March, a simple 2x4x8 cost $1.60 wholesale. Six months later, it cost nearly $5 wholesale.

“It’s not uncommon to see lumber pricing increasing through the heat of the season,” Maltry said. “However, not to the extreme of 130% nationwide that we are currently facing.”

Fortunately, the market appeared to have corrected itself and the price per thousand board feet is currently around $600. However, even at $600 per thousand board feet, lumber prices have only been this high one time since 2010. Industry experts attribute the scarcity of lumber to a multitude of factors, including surging new home construction and significant increases in do-it-yourself projects, evidenced by large sales increases at retailers like Home Depot and Lowe’s.

Spurred on by historically low interest rates, new home construction has reached its highest level in nearly 15 years. Lumber costs have added an average of $14,000 to the cost of a new home, according to the National Association of Home Builders. Despite this, the rock-bottom interest rates have allowed prospective homebuyers to absorb the added cost.

“The interest rates are still low so the fact of the matter is it’s still cheap money to borrow,” Maltry said. “You may be facing an extra expense in some product pricing. On the other side of it, you’re gaining from the financing piece of it. I’ve had a couple of customers say, ‘shouldn’t we wait until next spring or next year where lumber prices start to normalize and it’s more cost effective to build?’ Maybe not, because what if rates go up?”

Anecdotally, Maltry, who serves as his company’s chief sales officer, said he has noticed a significant increase in the number of customers considering large remodeling projects of their current home. Those projects include upgraded bathrooms, home gyms and home offices — all projects indicative of more people working from home than ever before.“

A lot of our renovation customers that we’re currently dealing with, since they have been working from home, they have realized the improvements that their home has needed,” Maltry said. “They’re starting to really realize [their] house needs much more improvement than what [they] were paying attention to previously. Early on in the stage of design, their mindset has changed and they are thinking about those things whereas previously it might have been in the forethought.”

Maltry said his company has avoided scheduling issues with lumber scarcity by submitting purchase orders significantly earlier in the process. That has allowed the majority the company’s recent projects — including a custom-built, open concept home near Eastlake — to remain on schedule. The home went from concept to completion during the pandemic.

“The build itself, we’re right at 180 days I think from shovel to dirt to completion here today. We’re doing the final walkthrough with our customer here today,” Maltry said. “Fortunately we didn’t skip a beat.”