Soaring lumber costs add to the price of new homes
Soaring lumber costs add to the price of new homes
The closely watched S&P CoreLogic Case-Shiller home price index will provide an update on home prices when it comes out Tuesday. Meanwhile, the National Association of Realtors reported Friday that the median sale price of an existing home was almost $304,000 last month, up 14.1% from a year ago.
One factor among many is the soaring cost of lumber.
There are a lot of forces driving up the price of wood. COVID-related mill shutdowns and devastating wildfires have reduced the available supply, while demand for homebuilding and remodeling has only grown.
Paul Jannke with Forest Economic Advisors said a lot of the wood that builders use comes from Canada.
“And now that we’re in the heart of winter, you do start to see some transportation disruptions, and that’s further bolstering prices,” Jannke said.
Higher lumber costs are adding more than $20,000 to the price of an average new single-family home, according to the National Association of Home Builders.
Economist Daryl Fairweather at Redfin said that also makes existing homes more expensive.
“Because if new homes are more expensive, existing home sellers can raise their price because they don’t have as much competition from new homes,” Fairweather said.
Analysts say lumber prices should start to come down as the weather warms and production catches up with demand.
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