Lumber Prices Are Finally Dropping

By Mari Krashowetz, Executive Officer at Southern Utah Home Builders Association

Anyone who has tried to purchase or build a new home within the last year is very aware of significantly higher lumber prices and building material supply shortages. Lumber prices skyrocketed during the pandemic, hitting an all-time high of $1,686 per thousand board feet last May, an increase of over 400 percent from the $333 it was trading at just one year prior to the recorded high. As a result, the price of a new single-family home increased significantly, causing some potential homebuyers to wait it out in hopes that housing prices would stabilize or decline. Now, lumber prices are finally coming down, causing builders, homebuyers, and lenders across the country to feel hopeful. Robert Dietz, Chief economist at the National Association of Home Builders (NAHB), is cautiously optimistic, saying that some building projects, suspended when lumber prices skyrocketed, may be able to resume. “If it’s the case that the price is coming down because it does represent a true uptick in the amount of supply, we’re going to see some of those projects move forward,” he said. Will lumber prices continue to decrease and will building materials become more readily available in the near future? No one knows for sure, but local lumber and building materials suppliers cannot solve this problem and are not to blame. Although we have definitely been impacted here locally in southern Utah, this is a national issue that requires a national solution.

Why Did Lumber Prices Surge? The following may help answer the “whys” behind what happened with the price increases. Was it related to the pandemic? Was it related to the labor shortage? Was it related to the limited supply and high demand in the housing market? You’re welcome to do your own research, but here are some facts you may want to consider: • Many mills reduced production due to stay-at-home orders and social distancing measures enacted by state and local governments at the onset of the coronavirus pandemic.

• When it became clear in the ensuing months that housing weathered the storm much better than predicted and demand remained strong, lumber mills did not ramp up production accordingly. • Producers did not anticipate the massive uptick in demand from do-it-yourselfers and big box retailers during the pandemic. • Finally, the extreme lumber price volatility was exacerbated by tariffs on Canadian lumber imports into the U.S. markets.

Why Is the Price of Lumber Dropping? There are several factors contributing to the drop in wholesale lumber prices. Fastmarkets analyst Dustin Jalbert suggested that sawmills responded to the demand for lumber and ramped up production once the pandemic turned a corner. He also noted that people returning to their offices and workplaces are no longer working at home. “If you’re spending less time at home, you’re probably spending less money on the home,” he said. “That remodeling, renovation, DIY boom—whatever you want to call it—that’s also softening.” Jalbert also added that future demands on the lumber supply are expected to drop even further in the fall and winter months when building slows.

Is There Good News Ahead?

Finding solutions that ease building supply and lumber shortages has been a top priority for NAHB and many organizations related to the housing industry. The Secretary of Commerce has pledged to address the growing problem of high lumber and material prices along with supply shortages. Congressional representatives and the current administration continue to work on resolving this critical issue. They recognize the home building industry and the housing sector are vital to a strong and growing economy. Despite current challenges with home building, there is still a high demand for new homes. Interest rates are still near historic lows and southern Utah is a wonderful place to live and work. During the pandemic, many people realized they have the option to work from home and a new home can provide amenities that support this new live-work-andplay lifestyle.

If you are looking for a general building contractor to build your next home, please visit www.SUHBA.com.

Mari Krashowetz, Executive Officer for the Southern Utah Home Builders Association (SUHBA), has been employed by SUHBA for 21 years. SUHBA is a trade association representing 670 home building industry related businesses in Washington County, Utah. She oversees the daily SUHBA operations, coordinates the annual St. George Area Parade of Homes, manages the education program, directs the Southern Utah Home Builders Care Foundation, and handles the Government Affairs program to help keep housing a priority in our area. In 2017, the St. George Area Parade of Homes received an award as the Best Parade of Homes in the Nation (National Association of Home Builders) and in 2020 and 2021, they received the Best of Southern Utah Annual Event award.

Mari is currently serving on the Dixie Technical College Board of Directors, the St. George Area Economic Development Council, and the Washington County Housing Attainability Committee. She is married to Tony Krashowetz, and together they have eleven children (including a set of triplets) and six grandchildren. Her family is most important to her and the joy in her life. She loves living in beautiful southern Utah.