Rising lumber prices are pumping up home prices

Surging softwood lumber prices are having a big impact on the price of new homes.

The big increases in lumber have caused the sticker on the average new single-family home to increase by more than $16,000 since April 17, according to National Association of Home Builders (NAHB) standard estimates of lumber used to the build the average home.

Simultaneously, the average new multifamily home has increased by more than $6,000 during the same period.

Random Lengths, the lumber pricing guide, reported that the price of framing lumber climbed beyond $800 per thousand board feet as of Aug. 21. This is a 130% increase since mid-April.

The NAHB said it calculated average home price increases based on the softwood lumber that goes into the average new home, as captured in the Builder Practices Survey conducated by Home Innovation Research Labs. 

This includes any softwood used in structural framing (including beams, joists, headers, rafters and trusses), sheathing, flooring and underlayment, interior wall and ceiling finishing, cabinets, doors, windows, roofing, siding, soffit and fascia, and exterior features such as garages, porches, decks, railing, fences and landscape walls.

The softwood products considered include lumber of various dimensions (including any that may be appearance grade or pressure treated for outdoor use), plywood, OSB, particleboard, fiberboard, shakes and shingles — essentially, any of the products sold by U.S. sawmills and tracked on a weekly basis by Random Lengths.  

At the prices reported by Random Lengths on April 17, 2020, the total cost to a builder for all the lumber and lumber-related products described above was $16,927 for the products in an average single-family home, and $5,940 for the products in an average multifamily home.

But the NAHB said that by the time Random Lengths reported prices on Aug. 21, the cost to builders had risen to $30,470 for the softwood lumber products in an average single-family home, and $11,061 for the products in an average multifamily home. 

This is a $13,543 (80%) and $5,122 (86%) increase respectively, in only four months.