Lumber prices are ‘looking like a repeat of 2021’ as housing demand remains red-hot and supply chain disruptions persist

lumber-prices-are-‘looking-like-a-repeat-of-2021’-as-housing-demand-remains-red-hot-and-supply-chain-disruptions-persist

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A survey of home builders revealed expectations that lumber prices will continue to soar in 2022.The expected boom comes as demand for homes remains strong and supply chain disruptions persist.”Lumber is expected to go back up significantly this year,” one home builder in Austin said.Sign up here for our daily newsletter, 10 Things Before the Opening Bell.In what might feel like deja-vu for home builders, lumber prices are once again surging to start the year, and some expect the rally to continue throughout 2022.

The price per thousand board feet of lumber jumped nearly 4% on Wednesday to $1,284, and is up 12% year-to-date. The move higher comes as demand for new homes remains strong and supply chain disruptions persist, according to a December home builder survey conducted by John Burns Real Estate Consulting.

“Lumber is expected to go back up significantly this year. Being told factories are still not operating at capacity and tariffs aren’t allowing solid competition to provide relief,” a home builder in Austin said. Another builder in Fort Worth said, “lumber pricing ready to skyrocket in January. Looking like a repeat of 2021.”

In 2021, lumber prices soared as much as 142% to a record high of $1,733 per thousand board feet due to strong demand for the essential building material and supply chain disruptions related to the pandemic, wild fires, and flooding in Canadian timberlands. Lumber prices eventually cooled off considerably, falling as much as 75% to just $452 before rallying 184% to current levels.

The demand for homes is expected to remain strong for the foreseeable future as a demographic wave of millennials graduate from student debt to mortgage debt and mortgage rates remain historically low. But supply of homes won’t satisfy demand anytime soon due to dwindling inventory and new homes not being built fast enough, according to data from Altos Research. 

“Prepare for bidding wars and intense real estate buyer competition this spring. The early data is in an it’s crazier than I expected, Altos’ CEO Mike Simonsen said in a tweet thread on Monday.

The data shows that the total inventory of US single family homes for sale sits at a record low of 292,262. That’s a big drop from the more than 1 million available single family homes for sales in 2015. 

Ultimately, the strong housing demand and lack of supply of both new homes and lumber itself means price increases in both commodities remains likely. 

Altos Research


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