In what can feel like déjà vu for home builders, timber Prices are rising to start the year once again and some expect the rally to continue through 2022.
The price per thousand board feet of lumber rose nearly 4% to $1,284 on Wednesday and is up 12% to date. The higher move 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.
“Timber is expected to increase significantly this year. Factories are still not operating at capacity and tariffs are not allowing robust competition to provide relief,” said one home builder. Said in Austin. another builder Fort Worth said“In January, timber prices are poised to skyrocket. It looks like a repeat of 2021.”
In 2021, lumber prices reached a record high of $1,733 per thousand board feet, up 142% due to strong demand for basic building materials and supply chain disruptions related to the pandemic, wildfires and flooding in Canadian forests. Lumber prices eventually cooled significantly and had previously dropped as much as 75% to just $452. It increased by 184%, reaching current levels.
Demand for homes is expected to remain strong for the foreseeable future as there is a wave of demographics graduating from student debt to mortgage debt and mortgage rates have remained historically low. But home supply won’t be able to keep up with demand anytime soon, due to declining inventory and new homes not being built fast enough, according to data from Altos Research.
“Get ready for bidding wars and intense real estate buyer competition this spring. The preliminary data is crazier than I expected,” said Mike Simonsen, CEO of Altos. A thread of tweets on Monday.
The data shows the total inventory of US single-family homes for sale is at a record low of 292,262. That’s a huge drop from the more than 1 million single-family homes put up for sale in 2015.
after all, strong housing demand and lack of supply Both the new homes and the lumber itself mean price increases are likely for both commodities.