Wood is typically used for building roofs. Now it’s known for blasting through them.
Lumber prices are up nearly 260% since April 2020, following a perfect storm of surging demand and diminished supply.
And it all started with a simple backlog…
At the start of the pandemic, sawmills anticipated weak demand and limited production by up to 30%. To their surprise, demand turned out stronger than ever:
- DIY boom: While the US economy shrank 3.5% in 2020, spending on home improvements and repairs grew 3%+
- Low interest rates: In December, US new housing starts hit a 14-year high
Despite wood production hitting a 13-year high in February, supply hasn’t caught up with demand — and now ~70% of builders are raising home prices to slow demand down.
The result is a $24k+ increase in the average price of single-family homes since April 2020.
European beetles are now coming in clutch
Not those European beetles. A literal beetle infestation across Europe is boosting logging there, and Europe’s share of US lumber imports reached a record high of 13% in 2020.
Those imports are critical to the US lumber supply as British Columbia has reduced production by over a third in 5 years.
In conclusion… (We wanted to end this piece with a joke about lumber, but we just couldn’t think of any that wood work.)
