Why Lumber prices Have Skyrocketed
The pandemic has severely impacted our raw material costs, especially lumber prices. The following factors help us better understand why:
- Before the pandemic, lumber prices were sufficiently low that some lumber mills reduced output or closed completely. Some consolidation took place as smaller mills were purchased by larger multinational firms.
- When the lockdown happened, many lumber manufacturers, mills and lumber transport companies shut down for several weeks. Huge producers reduced or stopped production in the spring of 2020 due to stay- at-home orders and social distancing measures at the onset of the coronavirus pandemic.
- With the stay-at-home orders in place, many people’s appetite for home improvement projects surged. Major retailers like Home Depot and Lowe’s remained open and provided lumber and other materials to supply this explosion of demand. When construction workers returned to work and when the current housing boom began, lumber consumption soared.
- With unprecedented government-provided stimulus funding, homeowners had more disposable income. Plus, low interest rates fueled new housing demand and home renovations. Lumber consumption boomed, and lumber mills could not sufficiently ramp up production.
- Lumber producers could not anticipate the huge increase in demand from do-it-yourselfers and big box retailers during the pandemic.
- Canada supplies a lot of lumber to the USA. Our neighbors to the north previously reduced output when some of their forests were diminished by disease and fire. Ramping back up is taking longer than anticipated.
- Last year’s massive wildfires in California and the west further reduced lumber supplies and impacted prices in other parts of the country.