Written By Karl VonBerg.

Posted on May 20th, 2021.

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Why is that lumber for my DIY project or new home costing 3x what it did last year at this time?

Why is that lumber for my DIY project or new home costing 3x what it did last year at this time?

The short answer is supply and demand. There is a shortage of lumber at the retail/wholesale stores in comparison to the demand that is out there right now. Framing lumber and plywood are both in short supply.

Framing lumber is primarily grown in the northwest and Canada. Treated framing lumber is grown in the southeast.

Let’s look closer at this to see in more detail what is going on.

First, there is no lack of trees in the woods to cut for lumber.

That’s right, there are plenty of trees to meet all the demand that exists right now.

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#1 Forest supplying trees for framing lumber

So what is behind this shortage?

  1. The Great Recession of 2007 and mill capacity.
    Back in 2007, mills were closing due to the housing crash.  Since then, the economy has slowly grown and mill capacity has kept up with that growth.  However, there aren’t the mills needed to increase production quickly.

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#2 Lumber for building material

  1. Then Covid:
    When Covid hit, the mills anticipated slowdowns in sales so they cut back on production, laid off workers and some workers left because they could make more money drawing unemployment.

    Once these mills realized that there was no slowdown in sales, the shortage had already started.  The mills had a hard time getting the labor they needed to increase production due to fear over Covid or workers getting more money collecting unemployment.  Mills also needed to temporarily shut down due to Covid infections.  This resulted in production slowdowns and an inability to meet demand. 
  1. City exodus creates more demand:
    Many folks who could moved out of cities and bought homes in less populated areas during Covid.  In many cases they renovated these homes.  Where they couldn’t find existing housing they have been building new houses.  This put an even greater demand on framing lumber, treated lumber and plywood.
  1. Tight supply chain:
    Along with this, the supply chain is tight due to a lack of workers. This includes loggers who cut the trees, truckers that transport the material to the mill or lumber yard, and lumber yard workers that sell the finished products.

So there you have the long version.

What does the future hold for prices?

Winter building was stronger than average and now we are into the strong spring and summer building period so demand is not going to go down until the fall at the earliest. How much it will go down is uncertain.

If you are waiting for lower prices, perhaps you will get an idea of any reduction by sometime this fall.

If you read this article and are frustrated with the lack of material you need for your building project, how about taking a break in the woods in your backyard or a public forest?  Enjoy the soothing effects of walking in the woods and discover something unexpected. 


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