Just as the United States is coming out of the woods of the pandemic, it is running out of wood. Skyrocketing lumber prices have been one of the unexpected results of the coronavirus pandemic.
As Levi Means of Parr Lumber told The Columbian: “There have been big surges in the past; in the early 2000s during the height of the housing boom before the major recession, you saw some pretty large increases in the cost of materials. They pale in comparison to this, fractions of what we’re seeing now.”
According to the National Association of Home Builders, lumber prices have increased more than 300 percent since April 2020, the early days of the pandemic. Then the concern was that business shutdowns that left people out of work would crater the building industry. Instead, people launched home-improvement projects such as building decks or remodeling a basement. Now, as the pandemic subsides, the focus is turning to residential construction as the nation tries to quell a housing crisis.
The result has been a run on lumber, leaving supplies short and causing costs to climb. That resonates throughout the building industry: “It’s adding about $36,000 to the price of a typical newly built home and almost $13,000 to a typical apartment,” Robert Dietz of the National Association of Home Builders told Vox.com. U.S. home construction fell 9.5 percent in April at a time when it was expected to be surging.
In the Northwest, expensive lumber seems like anathema. The region was largely built on a timber industry that had an abundant supply of natural resources.
Despite a downturn that has lingered since the 1980s, Oregon and Washington rank Nos. 1 and 2 among states in terms of softwood lumber production, according to the Oregon Forest Resources Institute. And our state Department of Commerce writes: “Washington’s forest products sector has provided wise stewardship of our natural resources and community-sustaining family-wage jobs for more than 165 years.”
But most lumber in the United States is imported — primarily from Canada — and domestic production has stagnated. In 2006, 4.9 billion board feet of lumber were produced in this country; that number shrunk to 3 billion board feet during the Great Recession before rebounding somewhat to 4.5 billion by 2019.
Then the pandemic hit, and producers adjusted. “They really dialed back,” one industry analyst told Vox.com, “thinking that demand would fall. And the reality is that demand never slowed.”
The good news is that the lumber crunch is expected to be temporary. As The Washington Post reported this month: “Lumber is a good example of why Federal Reserve Chair Jerome H. Powell is so confident that any inflation will be temporary. Once more sawmills return to their normal level of activity, lumber prices should drop.”
But inflation is a growing concern. In addition to disappointing job growth across the country during April, there was an unexpected jump in consumer prices. Analysts note that the increase is driven by a handful of industries rather than an economywide boost, but a broad inflationary period could hamper the post-pandemic economic recovery.
For now, however, the focus is unexpectedly on lumber prices that have affected home construction and have increased housing prices. As Andrea Smith of the Building Industry Association of Clark County told The Columbian: “When it goes to closing and having the financing process finished, a lot of times that difference can make or break a home deal.”