By Vincent Salandro | Builder
While lumber prices have recovered from the record high levels of May 2021, volatility in prices remains a key concern among builders. In its analysis of the most recent Producer Price Index released by the U.S. Bureau of Labor Statistics, the NAHB estimated lumber price volatility was at an all-time high for a 12-month period.
Amid concerns over volatility and continued supply chain disruptions, the NAHB submitted a letter to President Biden urging the White House to take action. The letter called for action to redouble efforts to address lumber price volatility, to address supply chain bottlenecks for lumber and other building materials, and to return to the negotiating table with Canada and develop a new softwood lumber agreement. The NAHB submitted a similar letter to the White House in January amid a period of historic lumber price escalation that negatively impacted housing affordability. As recently as July, the NAHB estimated rising material costs directly added nearly $30,000 to the average price of a new single-family home.
While lumber prices have recovered, the NAHB said cash prices for lumber have increased more than 27% over the last month and “news of mill curtailments are stoking fears of another massive price spike this fall, and next spring.” The association also highlighted how supply chain issues are causing delays and keeping home prices about 20% higher than a year ago. Ali Wolf, chief economist at Zonda, said the supply-side challenges are holding the market back from reaching its full potential.