High lumber prices are returning, and homebuyers should brace themselves for its impact. Lumber prices can affect not only the cost of a new home, but also many remodels, such as decks and flooring.
After peaking in the spring, lumber prices had been falling this summer, but that respite appears short-lived. In August, lumber prices bottomed out, but framing lumber is up 40% since then.
Lumber prices remain below the peak reached in May – about $1,515 per 1,000 feet, however. On Tuesday, lumber futures traded for about $735.70 per 1,000 feet, which is still more than double its pre-pandemic five-year average of around $356, National Mortgage News reports.
But housing analysts also warn that lumber prices aren’t finished climbing.
Lumber is critical for both the new-home construction process and remodeling, and builders blamed high lumber costs for price increases in the new-home market. In May, builders reported that soaring lumber prices added $36,000, on average, to the price of a new home.
This summer it looked like the new-home industry was going to catch a break when lumber prices started to plummet. However, pent-up demand refueled the market and is leading to another round of price increases, Scott Reaves, director of forecast operations at Domain Timber Advisors, told Fortune. Supply shortages are pressing on prices.