Housing affordability remains a major challenge at the local, state and national level, increasing cost burdens for renters and home owners alike.
Affordability constraints are due to a number of factors:
A lack of inventory over the last decade that has resulted in the nation facing a shortfall of more than 1 million homes to affordably house residents.
Building material production bottlenecks that are delaying projects and raising costs for a host of products, including framing lumber, steel mill products, plastic piping, copper pipe, wood windows and doors, and much more.
Local land use policy, ordinances and zoning codes that restrict affordable housing construction and limit housing production and density;
A lack of skilled construction labor with the number of unfilled positions in this sector averaging 300,000 to 400,000 each month.
Upward pressure on mortgage interest rates, as the Federal Reserve begins reducing its purchases of mortgage-backed securities and Treasuries.
Any housing or land development policy or code that makes housing development more expensive to produce effectively passes that cost onto prospective home buyers. For every $1,000 increase in the median new home price ($353,900), 153,967 households become priced out of the market.
Resolving lumber and other building material supply chain bottlenecks that are raising construction costs and harming housing affordability is the top priority for NAHB.
And with lumber prices rising rapidly over the past four months following a period of moderating price reductions in the late spring and summer of 2021, NAHB continues to push the administration and Congress to take action to resume negotiations with Canada to negotiate a new softwood lumber trade agreement; and to increase domestic lumber production.
NAHB is also calling on the Biden administration and Congress to take immediate action by:
Temporarily removing tariffs on Canadian lumber and other imported building materials, including steel and aluminum from China;
Alleviating the bottlenecks at seaports that are preventing goods and materials from getting to market; and
Seeking solutions to persistent delays in track and rail transportation to ease mass shortages that are putting upward pressure on material and home prices.
Latest Lumber Price Wave Adds $18,600 to the Price of a Home
Over the past four months, since late August 2021, lumber prices have nearly tripled, causing real hardship for home builders and buyers alike.
As a result of this latest surge, the price of an average new single-family home has increased by more than $18,600, according to NAHB standard estimates of lumber used to build the average home.
This lumber price spike has also added nearly $7,300 to the market value of the average new multifamily home, which translates into households paying $67 a month more to rent a new apartment.
Why Lumber Prices Have Surged
The unprecedented price volatility in the lumber market dates back to April 2020 when the COVID-19 pandemic took hold and sawmills curtailed production in anticipation of reduced demand.
When it became clear in the ensuing months that housing weathered the storm much better than predicted and demand remained strong, lumber mills did not ramp up production accordingly.
The slow reaction by sawmills, combined with a massive uptick in demand from do-it-yourselfers and big-box retailers during the pandemic resulted in lumber prices peaking at a record-shattering $1,500 per thousand board feet in May 2021, before beginning a gradual decline through late August.
This most recent lumber price upsurge is due to a number of factors, including:
Ongoing supply chain disruptions;
A doubling of tariffs on Canadian lumber imports into the U.S. market that increased price volatility; and
An unusually strong summer wildfire season in the western United States and British Columbia.
NAHB Top Priorities
Learn how NAHB is addressing the industry’s top priorities, including workforce development, affordability, material costs, building codes and more.