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Why Are Homes Jumping In Price By $14,000+ On Average?

Thanks to a recent spike in the price of softwood lumber, new single-family homes are getting even more expensive nearly overnight. Softwood lumber, which comes from conifers like cedars, firs, and pines, provides about 80 percent of all timber. Builders use softwood to construct roofs, inner walls, fixtures, fittings, and doors in buildings.

According to the National Association of Homebuilders (NAHB), new-home prices could increase by as much as 19.2 percent if the price of softwood continues to rise due to the costs of the wood and surging demand for single-family homes . The cost of softwood is rising in large part because Canada's softwood lumber industry is subject to a variety of tariffs when the wood enters the United States.

Although tariffs have been a hot-button issue in the U.S. in recent years, this trade dispute actually spans decades. The NAHB recently sent a letter to President Trump requesting he end tariffs on Canadian lumber shipments; those tariffs average more than 20 percent. Annual imports of softwood lumber from Canada usually exceed 30 percent because “the U.S. cannot produce a sufficient amount of softwood lumber to meet domestic demand,” NAHB CEO Jerry Howard wrote in that letter.

Median home prices are already rising across the board in new construction. In June of this year, prices rose 5.6 percent to $329,000. The NAHB warned that a $14,000 increase in median new-home prices could “price more than 2.1 million U.S. households out of the market.”

Are you experiencing the fallout from rising lumber costs?

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Sources:

http://eyeonhousing.org/2020/08/average-new-home-price-now-14000-higher-due-to-lumber/
https://www.newswire.ca/news-releases/world-trade-organization-issues-scathing-report-international-arbitrators-side-with-canada-806255342.html

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