Due to the coronavirus, sawmills had to shut down lumber production which led to a housing plunge. As the market continues to recover, there is still not enough lumber to supply the active housing market. Due to the shortage, the timeline for the construction of homes is delayed as well as making deadlines for renovation homes more complex.

The price of lumber reached a record high of $1,615 recently, seven times more when compared to pricing data from April 2020. While the shortage and pricing is known to eventually come down, the uncertainty of when and the need to purchase from homebuyers is demanding. Homebuyers are also facing the effects as pricing for homes is on average almost $36,000 more, according to data from the National Association of Home Builders (NAHB). Due to the laws of supply and demand, the cost of the lumber shortage is passed from the builders and developers to the buyers. 

The average sale price for a home in March 2021 was a little over $329,000, which is a new record according to NAHB since 1999. In some cases, lumber yards are experiencing theft due to the massive demand. Renters are also experiencing the pain of increased supplies, adding an estimated $12,000 to the market value of a rental home and $120 for a new apartment. 

Another reason for sawmills having low supply was due to the lack of demand for housing solutions in the mid-2000s, and the recession impact. This caused many sawmills to go out of business as well, leaving ones left open to supply all interested businesses as well as fight the effects of the pandemic. 

Lumber shortage is one of many examples of how rapid economic recovery from the pandemic is pushing supply chains to their breaking point. Manufacturers are desperate for workers. Smartphone, auto and appliance production is being sidelined by a shortage of computer chips. The lack of tanker truck drivers has raised the specter of gas stations running on empty this summer. And gas price increases are contributing to additional labor costs. The shortage is also being amplified by tariffs. The previous administration’s tariffs on Canada in April 2017 caused tariffs to increase 24% on lumber. During their last year, the Trump administration decreased tariffs to 9%. The building industry is now urging President Joe Biden to take further action. 

Many in the industry are asking the Biden administration to temporarily remove the tariff on Canadian lumber to help ease price volatility and make the supply more accessible. Chuck Fowke, NAHB Chairman, also stressed for the  White House to “bring together interested stakeholders to hold a summit on lumber and building material supply chain issues to identify the causes and solutions for high prices and supply constraints.”

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