How builders try to deal with rising lumber prices

By Paul Emrath | Eye On Housing

As most industry observers know, softwood lumber prices have been extremely high and volatile over the past year. During an unprecedented four-month surge in 2020 prices nearly doubled, reaching an all-time high in September.

Since then prices have continued to fluctuate, increasing recently to the point that they are now considerably higher than they were even at last September’s historic peak. In this environment it is not surprising that builders identified prices and availability of building materials as the top challenge they expected to face in 2021.

That raises the question of what, if anything, builders are doing to try to cope with the challenge. NAHB investigated this recently by including a question on reactions to the rising and volatile lumber prices in its April 2021 survey for the NAHB/Wells Fargo Housing Market Index (HMI). In response, 47 percent of single-family builders in the HMI panel indicated that they were including price escalation clauses in their sales contracts.

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