In recent months, lumber prices have surged by an unbelievable 308% since the start of the COVID-19 pandemic to a record high of $1,459 per thousand board feet.
As Fortune noted, the “scarcity of a formerly plentiful and cheap commodity” has further constrained the much-needed construction of new homes as “Homebuyers across the nation are up against one of the tightest housing markets in modern history.”
But why is there a lumber shortage in the first place? Here is a brief overview of some of the compounding factors.
Sawmill capacity struggling to catch up
In a similar fashion to other industries, sawmills saw widespread layoffs as they worked to massively scale down production in the early months of the pandemic. According to Fortune, U.S. wood production was down 16% by April 2020, compared to January 2020.
While wood production recovered to above pre-pandemic levels by the summer, it was still “far behind the boom on the demand side.” With the limited capacity of existing sawmills, the ability to keep up with demand has fueled the surge in lumber prices.
Canadian softwood, beetles, and climate change
Fortune also added that softwood lumber from Canada is “a favorite among U.S. homebuilders,” and is “particularly constrained” for a wide variety of reasons.
CEO of Deacon Lumber, Stinson Dean, said that “Canadian softwood production is limited by factors including British Columbia forest fires, beetle infestations, and the slow growth rate of spruce trees,” according to Fortune.
“If the production factors remain that are limiting log supply, I find it hard to believe we return to historical price ranges,” Dean said.
According to Quartz, part of the reason behind the shortage of lumber from Canada is the changing climate and its impact on a beetle species which infests forests in British Columbia.
Dendroctonus ponderosae is a mountain pine beetle, “a quarter-inch insect with a shiny black exoskeleton,” which is usually kept “in check by cold winters.”
“But in the late 1990s, the beetles started to live longer and reproduce quicker — an outcome, scientists believe, of a warming climate. They swarmed through the pines of British Columbia, attacking more than 44 million acres of forest, an area four times the size of Switzerland,” noted Quartz.
Americans turned to DIY during lockdown
According to Fortune, the “do-it-yourself” market surged during the pandemic.
“Essentially from the start of the COVID crisis, do-it-yourself projects boomed. Americans were spending a lot more time at home and finally got around to knocking out projects,” reported Fortune. “During the first two months of the recession, home-improvement sales shot up 13%.”
This rapid rise in demand had an impact on the price, with home-improvement spending still high, up 29% in March 2021 compared to pre-pandemic levels.
Record-low mortgage rates
During the pandemic, mortgage rates fell to record lows, with Fortune reporting that “fixed 30-year rates [bottomed] out at 2.65% in December.” Fortune also noted that this was partnered with a “five-year period when people born between 1989 and 1993, the biggest birth years for millennials, will turn 30 — entering the all-important first-time homebuying years.”
While housing inventory usually increases during a recession, these factors combined to cause a rapid decrease in the availability of homes. This only drove the demand for new housing, which requires lumber.
According to the National Association of Home Builders, “Soaring lumber prices that have tripled over the past 12 months have caused the price of an average new single-family home to increase by $35,872.”
Ian Haworth is an Editor and Writer for The Daily Wire. Follow him on Twitter at @ighaworth.
The views expressed in this piece are the author’s own and do not necessarily represent those of The Daily Wire.