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Lumber Prices Soar Due to Shutdowns, Higher Demand

Lumber prices in the U.S. have risen since the COVID-19 outbreak due to an increase in demand and lumber mill shutdowns.


Originally published by Construction Dive – August 21, 2020

Dive Brief:

  • The price of lumber for September delivery rose 3.1% to an all-time high of $641.60 per thousand board feet, the Wall Street Journal reported. The new high, a growth of $19 since last month, beats the previous high of $639, which was a result of a brief hike in 2018 from tariffs and forest fires.
  • This spring, the price of lumber futures hit a four-year low as sawmills closed response to the pandemic. When they reopened, the price began to rise, and hasn’t stopped.

Dive Insight:

Several factors have led to the price jump, according to the Wall Street Journal:

  • An increase in residential construction including do-it-yourself projects like decks.
  • Low mortgage rates that spurred residential construction and remodeling.
  • The construction of outdoor seating and dining areas for restaurants across the country.
  • Lumber mills that were unprepared for the surge in demand.

Confidence in the National Association of Home Builders/Wells Fargo Housing Market Index for new single-family homes leapt to 78 in August. Any score above 50 is considered a positive level of confidence in the market.

The current index is the highest it has been in 35 years, after dropping to a score of 30 in April. New home demand continues to be strong, but demand could lose momentum if lumber prices continue to rise.

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Study: Cost of Steel v. Wood

A recent study sponsored by the Steel Framing Industry Association (SFIA), “Costs to Build with Cold-Formed Steel Versus a Wood-Framed Building,” addresses framing costs on behalf of architects, building owners, and general contractors.

While the research was completed before the current spike in wood prices, “Costs to Build” establishes that CFS framing and wood framing costs in mid-rise structures are essentially the same, when construction insurance premiums associated with using the selected material are included.

Of course, the current skyrocketing prices of lumber make CFS framing the clear favorite from a pricing point of view right now.

Therefore, SFIA gathered pricing information and has issued a bulletin associated with the “Costs to Build” report.

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