New home prices are likely to rise again as the cost of lumber is accelerating once more.
The rising price of lumber will likely add thousands of dollars to the price of new homes as it’s the single most important building material used in the development of most properties.
Lumber prices are said to be around triple their average pre-pandemic cost, according to lumber industry news site Random Lengths.
That cost increase has added an average of $18,600 to the price of a new home, the National Association of Home Builders confirmed.
It’s certainly no joke. Meanwhile the average cost a new multifamily home is likely to rise by around $7,300, the NAHB said. That would translate to a cost of around $67 a month more for anyone looking to rent a new apartment.
The price of lumber reached record levels early last year. However, builders thought the worst was over as the price of lumber declined dramatically from the middle of the year until December 2021. However, that month saw prices rebound sharply.
The increased costs are due to sawmills being unable to keep up with the high demand of the construction industry, Random Lengths said. Sawmill output significantly trails the increase in housing starts, builders confirm. Also, ongoing supply chain disruptions, such as tariffs on Canadian lumber imports and a strong wildfire season, have also contributed to recent price rises.
Overall, building material prices have climbed 20.3% annually and have risen 28.7% since January 2020, according to NAHB data. The jump in building material prices has been led by rising costs for lumber and paint.