The National Association of Home Builders (NAHB) recently stated that the recent rising prices of softwood lumber have increased the average price of a new home by $35,872. So, why does this happen and what does it mean for new home sales?
Softwood lumber is used for many parts of building new homes including structural framing, flooring, wall and ceilings, roofing, windows, doors, and even porches, garages, decks, and fences.
The NAHB’s chief economist, Paul Emrath, shared that there has been a 184% increase in lumber costs for new single-family homes and a 190% increase for new multifamily homes. These statistics come from estimates that the cost for lumber needed to build an average single-family home went from $16,927 to $48,136, and the cost of lumber needed for a multifamily home increased from $5,940 to $17,220. These cost surges also account for a rent increase on new apartments of $119 per month.
Much of the blame for the recent increases in lumber prices goes to the pandemic which brought about many operating restrictions and shutdowns to sawmills. This happened alongside an increase in demand driven by more people moving to suburbs in an effort to embrace their ability to work from home. Other factors that have contributed to the raised prices include a lack of available workforce and supply issues like beetle infestations in Canada affecting imports of lumber.
As restrictions decrease and supply returns to normal, Wells Fargo predicts that this issue will eventually be resolved. It’s unclear when the imbalance between supply and demand will normalize, but with pandemic risks decreasing, hope is in sight. Despite these challenges, many people are still making their home ownership dreams a reality. So, if you’re looking to buy a home, it’s important to be prepared. You’ll want to work with a mortgage lender who can get you through the process efficiently and answer all of your questions along the way. Be sure to contact us today to learn more about how you can accomplish your home financing goals.
Source: Mortgage News Daily
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