Why are lumber prices soaring?

Dated: May 3 2021

Views: 101

Lumber Prices
$1,200 a board foot and futures into November even higher ($1,400)
Supply can’t catch up despite a 13-year production HIGH which mirrors the 14 years high in NEW HOME STARTS - at the current level would take 3 years to catch up.
Lumber 5 reasons for cost increase:
1. Pandemic - mills shut down and new safety protocols
2. Wild Fires (a few news cycles ago)
3. Labor shortage and new safety protocols
4. Increase in demand from DIY, remodels, and new construction
5. Canadian Lumber Tariff - Canada = 36% of the supply of US lumber supply.
Message from the Chief Economist at the NAR...
"March new housing starts across the US at the highest level in 14 years at 1.74 million. Both single-family and multiple-family ramped up. After 13 years of underproduction - one of the causes of today's market - the construction needs to continue at this pace for 3 years to make up for the demand/shortage.
Be patient as housing completion can be 4 to 6 months out. Construction workers win the day!"
A recent survey of “Consumer Finances” released by the Federal Reserve reveals the net worth of homeowners is forty times greater than that of renters. 40X.
In a post on the Liberty Street Economics blog, the Federal Reserve Bank of New York noted that 93% of Americans believe buying a home is definitely or probably a better investment than buying stocks. I suppose it’s kind of hard to live in a stock certificate.
Reasons? Viewed as less volatile and provides stability in the desired living environment. While it’s a tough market for buyers right now, stay in the game. Persistence is the word of the day.
Home sales for March would have been measurably higher had there been more inventory.
In March, total housing inventory was up 3.9% from February's inventory yet down 28.2% from just a year ago. Unsold inventory sits at 2 months of supply at the current sales pace.
Thus the strongest price appreciation ever since the tracking of the data from the 1960s. Up 17% on median price.
Home sales up 12% from a year ago.
Home sales down 4% from a month
Days-on-market is swift, multiple offers are prevalent, yet buyer confidence is slowly rising. New home builder communities can be great options, for those willing to wait.

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Kristen Vartian

As proud Texans, who were not born here –but got here as fast as we could. We are real estate professionals - REALTOR® and for more than 12 years have been facilitating the transnational and relati....

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