With record prices of lumber in the news these days, the cost of building a home has increased. There are a number of reasons for these cost increases which include the COVID-19 pandemic, but the main reason is higher demand with a limited supply.
Headlines in the news today often discuss the record prices of lumber throughout North America. Lumber has doubled or tripled in price over the past 12-18 months. This has been a major factor which has impacted the cost of building a home. One reason being that the pandemic has caused volatility and uncertainty due to closures or reductions in production by lumber mills. This has helped reduce the overall lumber inventory supply. Forest fires in the USA in 2020 also reduced inventories.
Demand for lumber has increased for a number of reasons. There is more activity in home renovations despite the pandemic and this was not anticipated by the industry. At the same time lower interest rates have helped to propel new housing start-ups, especially in the USA. All of these factors have moved lumber prices up – on top of the higher import duties that were slapped on Canadian lumber being shipped to the USA a few years ago. With spring right around the corner and the usual increase in building activity, lumber prices are not expected to decline.