GRAND RAPIDS, Mich. — Soaring lumber prices and insufficient supply is hitting the construction industry with a one-two blow. And, across the board, the lumber shortage is impacting everything from commercial construction to home building and even some of DIY projects.
The lumber shortage is a result of several factors, including the impact of the pandemic shutdown. Last Spring, the industry saw a production slowdown, which resulted in reduced supply. This coincided with added demand from home owners, with extra time on their hands, deciding to do more home improvement projects. Many industry experts, like Chris Veneklausen, describe the current lumber shortage as historic.
"You know, we were all continuing to work on our homes and build decks and remodel our basements, while we were shut down, but the suppliers were not able to continue to provide materials. So, it created this interesting supply shortage without a corresponding demand shortage," said Veneklausen. "So, it's certainly new. I mean we've never encountered anything like this. And, you know, I think everyone's doing their best to navigate it."
Veneklausen says while demand is strong, the problems are clearly coming from the supply side of the equation. He says the industry never rebounded after not being able to operate at full production for months on end because of COVID-19.
"And then, there have been segments that have been impacted, like with the big ice storm that Texas. That has impacted some of the resins that go into engineered wood. And, my understanding is that we're still catching up a little bit. So, any sort of engineered wood product has seen more shortages than other areas," he said.
"But those things come and go. So, really what's best, is whether it's somebody that's going to the home improvement store and looking to do a backyard or a basement type project, talk to the folks that are really on those frontlines. They'll have the best knowledge; and, we're doing the same thing. We're talking to our suppliers on a regular basis."
The skyrocketing lumber prices, which are equally troubling, are directly linked to the supply shortage.
According to the National Association of Home Builders, the cost of lumber has soared more than 300% in the past year alone. Those building a new single-family home should expect that to add upwards of $35k to their bottom line.
The industry trade association warns that "these sharp increases threaten housing affordability and the strength of the housing sector, which is leading the nation’s economic recovery." And, its leaders are calling on lawmakers to encourage domestic lumber producers to ramp up production to ease growing shortages, which will relax prices.
Veneklausen says despite soaring lumber costs, he is maintaining a positive outlook.
"Prices have seen a lot of upward pressure. The benefit is we have a market where interest rates are historically low. So, the lending environment is really favorable. Our customer base has continued to build. And I think partially because the math still makes a lot more sense to proceed, than it does to wait," he said.
"We have seen some softening of lumber prices, in particular, just the last couple of weeks. But, we're not expecting that to be long term yet; but, I think the market — the supply side — is catching up. So our expectations are, we'll see some improvement in the near future."
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