Then, in summer 2021, prices fell back to 2019 pre-pandemic levels. Now, lumber prices, like most commodities, are rising again. They are now about 15% lower than that peak in May 2021, but still about three times their average pre-pandemic price, according to Random Lengths, an industry website.
"Lumber prices will settle once demand slows. We will see prices fall with better logistics, but because of logging the market will never be able to keep pace with rising demand. Prices will come down as we get closer to summer, but there will still be a risk of going back up if demand picks up," he said.
That sent prices for the essential home-building commodity surging in 2020. By mid-2021, however, the price of lumber tumbled, as the industry leveled out production. Now, in the first half of 2022, lumber prices are sky high again.
Lumber prices fall to their lowest level in 2022 as the highest mortgage rates in 13 years dent housing demand.
Elevated lumber prices have created headaches for homebuilders since the start of the pandemic, and that trickles down to housing prices, but some of the largest builders in the country are predicting lumber price relief is on the horizon.
One of the most significant economic factors driving up lumber prices is an increase in tariffs on Canadian lumber imports into the U.S.. Last Nov. 24th, the U.S. Commerce Department raised tariffs on imports from Canadian softwood producers to 17.99 percent, more than double the previous rate.
January 2022 building material prices still increasing.
Treated, OSB and plywood items are following the same trends. We continue to see lumber pricies increase along virtually all items and categories.
The price of lumber dropped as low as $780 per thousand board feet on Monday, the lowest point for the commodity in 2022, Insider reported. Prices dropped as much as 6 percent on the day and 13 percent in the past week. Year-to-date, lumber prices are down 30 percent.
OSB is expensive because it takes a long time to expand lumber mills and increase their supply output.
Our outlook continues to be that if you are ready and able to build then now is the best time to do it. It is anticipated that interest rates will be on a rising trend throughout 2022 and costs will continue to increase, although the cost increases will be at a more normalized rate.
That supply decline is simply outmatched by high demand from builders who are still selling homes faster than they can build them. As prices started to spike late last year, suppliers and homebuilders responded by increasing their lumber orders.
The Risk of Waiting
What we do know is that interest rates remain at all time lows, increasing your buying power, which helps to make up for the increased cost of building or buying a home. Waiting to build your dream home means you could end up paying higher building costs or higher interest rates down the line.
But last week, the benchmark OSB price dropped by $100 per 1,000 square feet, or 23.5 percent, to $325 per 1,000 square feet. Industry observers said the price movement looks to be on pace to drop as quickly as it rose--the result, they said, of a cold-weather slackening in the pace of building.
On March 3, 2022, the price of lumber had rebounded in a dramatic fashion, reaching $1,441 per board foot on the way to a new potential top. It's been a move that fairly represents the kind of volatility market forces have been dealing with since the first few months of the COVID19 pandemic.
Linesight's latest Quarterly Construction Materials Costs report shows that higher prices seen in 2021 are set to continue throughout 2022.
Lumber futures are the contracts used to buy and sell a certain amount of timber that has been cut into beams and planks. Futures contracts are a legally-binding agreement between two parties to exchange the commodity for a set price, on a set date in the future.
OSB board costs $32–$77 per 4-by-8-foot sheet
This is where OSB comes in. Oriented Strand Board (OSB) is a construction material commonly used for wall sheathing, floor underlayment, roofing, and siding. The average cost of OSB is $32 to $77 per 4-by-8-foot sheet, depending on the type and thickness.
In the developed world, steel demand was expected to increase by a lower 1.1% in 2022 and 2.4% in 2023, after rising 16.5% in 2021.
Prices have increased over the past 18 months for several materials, due to lengthening lead times and growing demand. This has made it difficult for manufacturers and suppliers to build up stock levels.
The price of lumber dropped to $829 per thousand board feet on Tuesday, the lowest mark for the commodity in 2022, Insider reported. Rising mortgage rates and growing inflation were cited as causes for the slip, along with a decline in home renovations.
The estimating cost of a dimensional lumber board 2x4x8 is between $4.10 to $5.17. Also, some other prices of lumber you should keep in mind include 2x3x8, 2x6x8 which are $2.87 and $8.82, respectively.
Lumber is expensive due to supply and demand and the various factors that influence both. Thanks to the COVID-19 pandemic and inflation, suppliers have had a difficult time filling the gap in lumber demand as well as meeting the current demand for wood.
While the average cost to build a house is $282,299 as of February, most homeowners spend $114,209 – $450,824 to build their homes. Even though you can get a general idea of what you may pay, it's important to keep in mind that there are numerous factors that will impact the cost to build.