The framing lumber composite price rose 1.6% during the week ending Aug. 16. After dropping to their lowest level since April 2020, lumber prices have now risen for five consecutive weeks. This increase in lumber prices has significant implications for the U.S. framing lumber market and the cost of new homes.
NAHB continually tracks the latest lumber prices and futures prices, providing an overview of the behaviors within the U.S. framing lumber market. The Random Lengths framing lumber composite price, sourced each week, is comprised using prices from the highest volume-producing regions of the U.S. and Canada. In addition to lumber prices, other wood prices, including plywood prices, are also monitored.
In the week ending Aug. 16, the Random Lengths framing lumber composite price rose 1.6% from the previous week. Prices are up 7.8% in the past month, but they are still 7.6% lower than one year ago. Lumber futures prices also rose 5.3%, trading at a premium of over $100. Prices are 0.8% higher than a year ago. The structural panel composite price rose 0.6% from the previous week, with OSB prices declining 0.9%, Western Fir plywood prices rising 0.1%, and Southern Yellow Pine plywood prices increasing 2.8%.
Softwood lumber prices have been volatile due to increased demand, rising tariffs, supply-chain bottlenecks, and insufficient domestic production. To address high lumber prices, NAHB has advocated for negotiating a long-term deal with Canada to reduce tariffs, increasing domestic production, reducing U.S. lumber exports, seeking new markets, and working with countries exporting softwood lumber to the U.S.
The impact of wood and lumber prices on the cost of a new home is significant. Softwood lumber, plywood, and other wood products make up a considerable portion of the total materials and cost of a new home. Changes in softwood lumber prices directly impact the price of a new home, along with rising wages for construction workers and higher interest rates, contributing to declining affordability in the housing market.
Builders may begin to see price relief once mill prices have substantially decreased for an extended period and/or stabilized. The length of time for lumber price reductions to reach builders varies based on factors such as builder size, supplier size, and the builder-supplier relationship. Higher prices reach builders more quickly when market prices are increasing, as wholesalers and retailers adjust their inventory costs to maintain positive operating margins.
In conclusion, the rise in framing lumber composite prices has implications for the U.S. framing lumber market and the cost of new homes. Understanding the factors influencing lumber prices and the impact on builders and homebuyers is essential for navigating the dynamic lumber market. By staying informed and proactive, stakeholders in the construction industry can better manage the challenges posed by fluctuating lumber prices.