Soaring wood prices are pushing up house building costs

(iStock)

After soaring earlier in the year and then leveling off for a few months, lumber prices are rising again.

Higher material costs and long waits for building materials are the reasons why prices are rising and the number of homes available in the Capital Region is declining, says Karen Zito, President and CEO of the Home Builders Association of Greater Baton Rouge.

For example, in the parish of East Baton Rouge, the number of houses for sale fell by almost 46% in November compared to November 2020, according to Greater Baton Rouge Real Estate Association.

“We need an inventory,” Zito says. “Demand exceeds supply.

Rising lumber prices in 2020 and early 2021 raised the average price of a new single-family home by nearly $ 30,000, she says. The latest lumber prices have fallen significantly from their May high, but are trending up again.

Simple supply and demand are the main driver, although tariffs on Canadian lumber which includes about a third of lumber used in local construction contributed to the increase, Zito says. The average price of a bundle of lumber for a single home has increased by about 15% this month alone, she adds.

According to the latest Bureau of Labor Statistics producer price index report:

  • Prices for goods used in non-energy residential construction climbed 1.8% in November.
  • The average price of all residential inputs has climbed 17.3% in the past 12 months and is 22.7% above its pre-pandemic level.
  • Softwood lumber (seasonally adjusted) increased 6.9% in November and 16.1% since September.
  • The prices of steel products rose 2.4% in November and 151.4% since August 2020.
  • Ready-mix concrete rose 0.9% in November, 8.3% since January 2020 and 6.6% year-to-date.
  • Prices for plaster products fell 0.2% in November, but increased 19.8% in the past 12 months and 18.8% in 2021.


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