Softwood lumber prices increased nearly 50 percent since April, including a 14.9 percent climb in August – the largest four-month growth since the Bureau of Labor Statistics started tracking the data.

Skyrocketing prices in lumber have smashed the prior record recorded in 2018, said David Logan, tax and trade director for The National Association of Home Builders (NAHB).

“It’s more than 50 percent higher than that prior record,” he said. “The severity of the price increases differs slightly by region, but everyone in the country is facing the highest lumber prices they have ever seen.”

That obviously creates some challenges for those working in New Hampshire’s homebuilding industry, as the soaring prices have impacted all contractors nationally.

“Since April 2020, lumber prices have added $16,000 to the cost of building a new single-family home,” said Sharon Wayman, executive director of the New Hampshire Home Builders Association (NHHBA). “Contractors that I have spoken with are not only concerned about the rise in the cost of lumber but also the length of time it takes to get the materials needed to complete a project.”

Reasons for the Increase

Most of the reasons for the increase are related to issues brought on by the COVID-19 pandemic; Logan said there are both supply and demand reasons for the price spike.

“In the first two to three months of the pandemic, certain businesses were not considered substantial. Forecasting that demand for the product would decline precipitously, lumber mills curtailed operations significantly from March into June, in some cases upwards of 50 percent,” he said. “When we got back into building mode, there was very little inventory sitting there to work with.”

Meanwhile on the demand side, no one anticipated the surge in do-it-yourself projects.

“We had a lot of people staying at home looking to complete projects they hadn’t had time to do before, so we saw this big surge in lumber by big box retailers,” Logan said. “The housing sector got off to a much quicker restart than anyone predicted and the supply lags behind what the country needs to build.”

That’s impacted New Hampshire as well, as the ratio between supply and demand has been off the charts.

“There is just not enough domestic production,” Wayman said. “Many mills reduced production due to state and local government shutdowns with the onset of the COVID-19 pandemic.”

Additionally, Canadian softwood lumber coming into the U.S. carry tariffs averaging 20 percent, she noted.

In-Demand Housing

The homebuilding industry in New Hampshire has been able to continue working through the COVID-19 pandemic thanks in part to the legislative efforts of the NHHBA.

“Contractors in New Hampshire are extremely busy. There is no shortage of work,” Wayman said. “The challenges contractors are facing is explaining to the homeowner why the cost to build a new-single family home has increased by $16,000, or a why the cost to do a remodeling project has increased, and the delay in getting the materials to complete a project.”

Huge increases in demand for pressure-treated lumber started in March, and even with the high prices, people are still “champing at the bit” to get their hands on it, said Eric Murphy, purchasing manager of East Coast Lumber Building, a building supply store in Epping

“It took a little bit of time before the homebuilder segment took off, but it quickly became painfully obvious that people continued to look to move and buy houses, and so they are seeing a real impact and trying to price their projects accordingly,” he said. “It hasn’t really stopped anybody yet, and single-family builders are building as fast as they can.”

Permits for single-family homes were up 18.9 percent year-over-year in New Hampshire in the month of July, according to NAHB, dwarfing the national number, which saw only a .8 increase.

But don’t look for lumber shortages to have an outsize impact on home prices, said Dave Cummings, communications director for New Hampshire Realtors.

“As there are fewer and fewer alternatives for buyers of existing homes, they’re turning to new construction, so it’s a simple matter of supply and demand,” he said. “There are too many buyers and too little inventory for this to have a significant market impact. And once the market does start to see an impact, the price will adjust.”

Looking Ahead

Some homebuilders have been postponing projects, waiting for the prices to go down and supply to catch up, but Logan noted they can only delay for so long. For that reason, he expects the 2020 building season will extend later into the year than normal.

Wayman said it’s hard to predict whether or not the high lumber prices will continue over the next year, as it will depend on a number of factors and the outcome of items the NAHB are working on with the White House administration.

“NAHB continues to seek prompt action by calling on domestic lumber producers to ramp up production to ease the growing shortages, work with Canada on a new softwood lumber agreement that would end tariffs averaging 20 percent on Canadian lumber shipments into the U.S., and requests to boost production by seeking higher targets for timber sales from publicly-owned lands and opening up additional federal forest lands for logging in an environmentally sustainable manner,” she said.