What High Lumber Costs Mean for Home BuyingFor anyone paying attention to lumber prices, the last year has been staggering to say the least. The unbelievable increase in lumber prices has had far reaching effects and has touched the housing market in a significant way. Let's take a look at why lumber has increased so much in price and what that means for those looking to buy a house for sale in Kissimmee FL in the near future. 

Just How Much More Expensive Has Lumber Been?

Since April of 2020, general lumber prices have increased more than 500% and surged the most between July and October. To put that increase in perspective, a “random length” of lumber costing roughly $375 in April of last year cost $1,609 as of May 4th of this year. The random length of lumber is a standard measurement used in lumber commodity prices. 

Why Prices Are So High

The biggest reason for the increased prices is the rise in demand and the inability of the sawmills to provide adequate supply. The previous housing boom of the mid 2000s caused many sawmills to go out of business when the market corrected and has left the industry unable to fill the currently surging orders for lumber. While the mills were able to maintain a supply of goods during a normal market, they were unprepared for such a drastic uptick in demand.

The Covid pandemic had us thinking if it was right to buy a house during the pandemic and also left a lasting impression on the lumber industry that is affecting the current lumber market. In anticipation of a pandemic related housing slump, many mills shut down or eased production, this slump never came and put lumber producers behind the eightball. Some mills had to shut down production due to local regulations, while others were forced to reduce staffing and therefore reduce production until they could guarantee a safe working environment during the height of the pandemic.

Where Prices Are Headed

Reduced regulations and increased vaccination has allowed many sawmills to return to normal function in recent weeks to help combat the added need for lumber. Many economists and industry experts feel the worst is behind us and mills will soon be able to match production with demand levels. While this won't be an overnight improvement, with most mills back online we will start to see lumber prices fall over the coming months. 

What It Means For Home Buyers

For home buyers, the lumber price increase has also been apparent. Brand new houses for sale in Kissimmee Fl have seen a price increase of roughly $12,000 due to lumber costs. A recent estimate of the average lumber cost to build a home hit $70,000, nearly double what it was just eight months ago. These costs are being passed along to new home buyers and are resulting in increased purchase prices for resale homes. While lumber prices are not the only factor impacting the recent boom in the housing market, prices of lumber returning to normal levels will make an impact on the resale market moving forward and will help slow the drastic increase in home values. 

While prices of lumber hit record highs over the last year, and homes saw similar increases, there is light at the end of the tunnel. With production finally meeting demand levels there will be continued relief in lumber prices and related industries and metrics will continue to improve as well. Anyone concerned about the high price of lumber should rest easy knowing we are almost out of the woods. 

Posted by Florida Realty Marketplace on
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