Lumber prices have risen 67 percent this year and 340 percent in the past 12 months, according to Random Lengths, a lumber industry research firm.
The price spikes have added $35,872 to the average cost of a newly built single-family home and $12,966 to the market value of a multifamily dwelling, the National Association of Home Builders (NAHB) reported.
Lumber is scarce after seasons of massive wildfires in the western U.S. and duties imposed on imports during the Trump administration.
In addition to lumber, the price of drywall has gained 7 percent this year; steel products have climbed 18 percent to a record high; and copper has shot up 27 percent so far this year, setting a new record of its own.
Builders also have bid up raw land by 11 percent during the current housing rush, trying to stockpile spots to build the new homes the flood of buyers are demanding.
One in every four homes sold now is newly built; in the past, the ratio has been one in ten, CNBC noted.
However, the new work-from-home norm for white-collar employees, federal stimulus checks, and record savings during the pandemic are combining to drive people to the housing market in droves.
At the same time, the number of existing homes for sale is at a record low.
Many owners have decided to stay put until the economy is on a more sound footing, some worry they would be unable to afford a new home at today’s record prices, and others have lost their jobs or had their work hours cut and cannot afford to move.
The NHAB is urging federal officials to lift all tariffs on lumber imports.
TREND FORECAST: To illustrate how fast and high inflation is rising, in our 23 March Trends Journal, we wrote,
Rising lumber costs have added $24,000 to the cost of the typical newly build home and $9,000 to the cost of building a single apartment, according to the National Association of Home Builders (NAHB).
“Current prices represent an intolerable, and frequently insurmountable, financial burden to home builders and contractors,” the NAHB said in a statement announcing the price rise.
Since that time, a little more than a month ago, the lumber costs to build a home rose to $36,000!
Again, the inflation spike is real, and it will force the Fed to raise interest rates. And the higher interest rates rise, the deeper the economy and equity markets will fall.
TREND FORECAST: In our 23 March issue, we noted these “dramatic price increases to illustrate how inflationary pressures are rapidly escalating but, at the same time, they are being played down by the Federal Reserve and Washington, as they promise to keep injecting more money into the economic system.”
And, just today, U.S. Treasury Secretary Janet Yellen is finally admitting what they in fact knew back then but kept playing down to keep equity markets rising.
As we also wrote in our 23 March Trends Journal, “And now, with more lockdowns across the globe and states on hold in the U.S. to open up, the economies will sink deeper, and yet more cheap money will be injected to artificially prop them up. In turn, currencies will depreciate, inflation will rise, and safe-haven assets will increase in value.”
