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Home » Housing » US Real Estate » Home Builders/Developer's » Rising lumber costs add K to the price of new homes

Rising lumber costs add $14K to the price of new homes

By Mike Wheatley | August 27, 2020

The average price of a new single-family home has risen by 14% due to a spike in the price of software lumber, according to a report by the National Association of Home Builders.

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The report said that new single-family home prices have risen by $14,116 since April 17, while new multifamily homes have increased in price by $5,322 over the same time frame.

“Without increased domestic production and reductions in Canadian tariffs on softwood lumber, these higher input prices will slow the market,” the NAHB warned in its report.

Softwood lumber is a primary construction material for new homes, used within its structural framing—beams, joists, headers, rafters, and trusses—as well as in flooring and underlayment, interior walls and ceiling finishing, cabinets, doors, windows, roofing, siding, and exterior features like garages, porches, decks, railing, fences, and landscape walls.

The NAHB further estimated that items in a home that require lumber, and what's used throughout the construction process, could mean buyers see prices increase by an extra 19.2% altogether.

In addition, other factors such as interest on construction loans, brokers’ fees, and margins required to attract capital to residential construction and get construction loans underwritten, could boost prices even further, the NAHB said.

It noted that median new-home price in June rose 5.6% to $329,000 compared to a year ago.

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected]
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