The COVID-19 pandemic has affected many businesses throughout the nation including real estate. Though it may not seem that way at a glance, as real estate sales are going strong with plenty of buyers in the market, the pandemic has left its mark on the industry, particularly on home building supplies. One of the hardest hit supply chains is lumber and its effects can be seen with new construction homes.
Realtor Magazine published an article in its latest edition about the effects of the pandemic on the lumber industry and its relation to new construction homes. Below are a few takeaways from the article.
- Lumber prices increased substantially due to U.S. lumber mills being closed down because of the pandemic; others factors including the tariffs with Canada & the wildfires contributed to the price hike.
- Small home builders are having a hard time coping with the price increases compared to larger home builders.
- DIY projects by homeowners made the supply and demand for lumber disproportionate.
- Sales prices of new homes rose sharply to make up for the lumber prices, thus pricing out some buyers from purchasing new construction homes.
- The demand for new construction homes by home buyers is still high despite the higher prices.
- For some contractors, there is an uptick in the remodeling business as remodeling does not need as many materials.
- 2021 Outlook: Lumber prices to moderate and could possibly decline this year, especially if certain actions are taken such as the increase in domestic production and better negotiations on lumber agreements with Canada.
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Source: Realtor Magazine Article titled “Lumber Takes a Fall” – January/February 2021 Issue