Lumber Prices Are FINALLY Falling. Here's Why—and What It Means for You.
Lumber prices have peaked and begun to fall from their record highs in the spring.
Unfortunately, that may not immediately translate to more 2x4 availability, or lower costs for new construction projects, like homes.
You'll want to consider reducing your own demand for lumber (or use other materials).
After a meteoric rise to $1,670 per thousand board feet this May—up from $336.2 per thousand board feet about a year earlier—the price of lumber has started to set new records. Only this time around, it's for the biggest price fall in recorded history.
On July 16, lumber futures hit a recent low of $536 per thousand board feet according to NASDAQ data, representing a 67 percent drop from May's peak. As of July 23, that figure has creeped back up to $634 per thousand board feet, but one thing is clear: lumber prices have fallen dramatically overall.
But why are the prices ping-ponging around so much, and what does that mean for building trade professionals and weekend DIY warriors?
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First, the good news: Lumber prices will likely continue on a downward trajectory, eventually reaching pre-pandemic levels sometime in the next 12 months, Stuart Katz, CIO at wealth management firm Robertson Stephens, told Markets Insider. However, that decline will not be spread equally, he says. Instead, it will vary by geography.
"There may be regional aspects of this," Katz said. "There's an aggregate lumber price but because of some of the secular trends in home building and multifamily units ... I could see there being local geographic tensions and price that would maybe make it more elevated than if you went to broad headline price."
Katz believes Sunbelt states (such as South Caroline, Florida, and Texas) could continue to see high lumber prices. That's because there's an influx of people moving to those parts of the country from other states, squeezing the demand for new houses, and therefore, lumber.
That brings us to the bad news: Due to the change in cost for softwood lumber products from the start of the pandemic up until now, the average cost for a new single-family home has gone up about $29,833, according to the National Association of Home Builders (NAHB). That tacks on an additional $9,990 to the market value for an average new multifamily home, and even translates to higher rent prices—$92 more per month, on average.
🌲 Hardwood vs. Softwood: What's the Difference?
Softwood: Sourced from coniferous trees, softwood is less dense than hardwood, but is lauded for its versatility and strength. Softwoods are commonly seen in both internal and external projects—including interior moldings, window manufacturing, and construction framing—and in the production of plywood and fiberboard.
Hardwood: This wood comes from deciduous trees (the kind that drop their leaves each year). Hardwood offers better strength and durability than softwood, but because the trees grow at a slower rate, and the processing requires longer drying times, it's a more expensive product. Hardwood is commonly used in furniture, veneers, musical instruments, flooring, and boat-making.
Those estimates probably seem high, considering the recent declines in lumber futures that we mentioned earlier. So, what gives?
As NAHB explains, framing lumber prices are still about twice as high as they were in April 2020—and that's just one example of the softwood lumber used in your average home. The price estimates also include plywood, oriented strand board (OSB), particleboard, fiberboard, shakes, and shingles.
And unlike framing lumber, those softwood products have not seen a significant decline in price. "In fact, since April 2020, the price of softwood plywood has increased by more than 200 percent, and the price of OSB has gone up by nearly 500 percent," NAHB notes.
If the price truly has inflated due to the pandemic, experts say, they're hopeful that reopening and the much-ballyhooed "return to normalcy" will partially help correct the market. Even so, high lumber prices will likely stick as long as high demand continues in one of the most costly times to ever build a new home. And as prices fall, people will likely try to take back up the projects that they put on hold, even at the relatively inflated price.
What does that mean for your DIY projects, which most likely involve softwood products? Well, due to scalping and stealing, lumber shortages and the accompanying high prices are likely to continue at the consumer point of sale, even as the price of lumber commodities falls. That means you should use lumber carefully and sparingly, planning projects that require less or no lumber. That may not be enough, though, as prices of materials like copper, cement, and concrete are also at record highs this year.
Bottom line: Until the lower commodities prices translate into more plentiful availability and lower consumer prices, the lumber shortage will effectively continue for people who need to buy lumber—despite its futures market. But small-time DIYers may have better luck soon. If you need just a sheet or two of plywood, for example, you may soon find it restocked in your local hardware store, rather than backordered for days or weeks because of local construction demand.
In the meantime, Pop Mech's senior home editor Roy Berendsohn has a few tips:
Strategy #1: Use reclaimed lumber.
"If you know a remodeler, ask them if they have a demolition project on their calendar," Berendsohn says. "Or if you know somebody who is planning a remodeling job, see if you can handle some portion of the demo work in return for the lumber." Take a look around your house for old attic attic or basement shelves that can be repurposed, too.
Strategy #2: Use Wooden pallets.
Pallets have a special disincentive for most kinds of recycling because they're made of both hard and soft wood. "Many times, disposing of pallets poses such a nuisance to a company that they may be yours for the asking," Berendsohn says. From there, you can break or cut them up into whatever materials you need.
Strategy #3: Consider alternative materials.
This is more of an ideological choice than one that will save you money, Berendsohn admits. But if you want to use less lumber, or you’re just tired of looking at the empty racks at your local home repair goods superstore, consider reframing your project—literally. "Will some small concrete blocks substitute for that lumber you were going to use for that raised garden bed?" says Berendsohn. "Maybe rocks for the raised bed?"
Strategy #4: Avoid wasting lumber.
This is key. If all you can grab is a single sheet of plywood, plan your project carefully so you cut just what you need in the shapes you need, Berendson advises. But it goes further than that. Think about stock lumber sizes and plan to use whole cuts or as close as you can get. You might have to do some math, but you won’t end up needing to cut and use six inches from an entire 2x4.
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