A contractor frames a house under construction in Lehi, Utah, USA, on Wednesday, December 16, 2020. Private residential construction in the USA increased by 2.7% in November.
George Frey | Bloomberg | Getty Images
Consumers want more newly built houses at affordable prices, but it is difficult for builders to deliver, especially as prices for wood framing are rising more and more.
Timber prices rose more than $ 1,000 per 1,000 feet on board Thursday morning before falling below that stage, according to Random Lung Lumber Futures for March. The $ 1,004.90 high is double the price of just three months ago and a record.
The higher costs of timber are probably behind a decline in housing in January. The start of single-family homes, which are the most desperate, has fallen 12% since December, according to the US census.
“Builders report concerns about rising timber and other construction costs and delays in obtaining construction materials,” wrote Robert Dietz, chief economist at the National Association of Home Builders. “Rising interest rates will also erode the affordability of housing in 2021, as existing housing stocks remain low.”
Dietz also noted that the number of single-family homes allowed but not started increased by 9.6% in December and was 28% higher than a year earlier, as building material costs rise and delays slow some home construction. .
The executives of some of the largest housing builders in the country noted in the winning calls that they have slowed down production, hoping to expect some of these higher costs.
Unfortunately, it does not seem to lower costs. Several factors should have removed the pressure on prices, but so far they have not.
Joe Sanderson, general manager of natural resources at Domain Timber Advisors, highlights these recent developments:
- Canadian timber tariffs fell from 20% to 9% in December, reducing Canadian timber and sending more timber imports to the US
- La Nina conditions result in a pattern of dry weather in much of the south. The drier-than-normal winter has led to additional logging capacity, which increases timber supply.
- New sawmills have gone online in recent months.
He added that timber producers are trying to block yields and yields in the first quarter of the new year, while demand is strong. Therefore, they run at a higher capacity than normal to take advantage of these prices, which can lead to oversupply.
Strong housing demand, low interest rates and the housing remodeling boom continue to drive up prices. At some point, however, the basic reality of accessibility should at least slow down some of the growth.