Much as drivers are seeing prices rise for gasoline, so too are construction professionals seeing price hikes for one of the key materials of their trade – lumber.
The COVID-19 pandemic has played a key role in causing this increase in pricing. Construction projects in many parts of the US were slowed as states adopted work rules – such as social distancing – that added to the time needed to complete jobs. In other states, nearly all construction was halted as governors declared much building activity to be nonessential. In consequence, a number of lumber producers have temporarily or permanently ceased operations, reducing lumber supplies as fewer homes were completed and renovation activity fell off.
At the same time, large numbers of US consumers suddenly found themselves at home for extended periods of time, providing ample opportunity to complete those tasks – including home repairs and maintenance. As indicated by the most recent data, building materials suppliers and distributors saw solid sales growth in April. While some of this was due to seasonality and construction professionals stockpiling materials for future use, sales were supported by homeowners engaging in DIY projects, such as building decks and fences, renovating rooms, and installing shelving.
Going forward, it is expected that lumber prices will continue to rise as housing starts rebound and consumers feel more confident in undertaking large-scale home improvements – such as kitchen and bathroom renovations – that have historically most often been done by professional contractors. However, the DIY segment will continue to play a role in building construction, which will further boost lumber pricing and lumber production going forward.
For more information, see The Freedonia Group’s collection of research and analysis on construction and building product industries. Freedonia Custom Research is also available for questions requiring tailored market intelligence.