The COVID-19 pandemic that took the world by storm in early 2020 and continued well into 2021 has wreaked havoc that many people did not expect. While many people were prepared for shortages with medical supplies and healthcare services, they weren’t ready for the other problems that came with it. The USA experienced toilet paper and cleaning supply shortages, lumber and construction material prices skyrocketing, world-famous store chains closing their doors…
It may surprise you that there is a shortage of building materials, so let’s take a closer look at that. Did COVID cause all of this, or is the shortage and price increase due to something else? The short answer is that it’s both, which we’ll explain below.
COVID-19 And The Effect On The Lumber Industry
When the pandemic was declared such, and the severity of the situation was evident, production was forced to shut down amid concerns of outbreaks while people were stocking up on supplies to ensure they had all they needed for their businesses and home projects.
Of course, when you keep taking something that’s not being produced, eventually the supplies will become scarce, which is precisely what happened in this situation. Because of the high demand, the prices have increased drastically.
What Else Increased Lumber Prices?
Before COVID hit, most of the USA was battling wildfires. With millions of acres of trees and land burnt, the National Association of Home Builders (NAHB) mentioned that it would be difficult to recoil from such devastation and that they would see lumber shortages well into 2021. Those shortages had already caused a price increase of about $1.50 more per 2 by 4 and about $150 to $200 more per thousand board feet.
How Much Has Lumber And Building Materials Increased In Price?
Since April of 2020, the beginning of the COVID pandemic, the lumber industry experienced an increase of over 200%, which has affected the housing market, construction, and many other types of projects. Since production was severely limited to the point of causing shortages, the price was increased to make up for that loss.
To put that 200% increase into perspective, in June of 2020, lumber cost less than $500 per thousand board feet. April of 2021, that price increased to more than $1,100 per thousand board feet, according to the National Association of Home Builders (NAHB).
To dive into that even more, let’s take a two by four, for example. Typically, you can expect to pay about $3.30 or so for a standard two by four. Now, in 2021, that has increased to about $8.50. A ½ inch of plywood now can cost as much as $50 when it is used to cost about $15. This increase happened in less than a year.
When Will Lumber Prices Decrease?
Now that you know what drove the prices up, you might be wondering if it will ever come back down. The good news is that yes, the prices will eventually come back down, but there is no sure answer on when that will happen. However, you will likely see a gradual fall over the next 18 months, and lumber should be back to pre-pandemic prices by the end of 2022.