Why Are Lumber Prices So High?

Constructiondive.com recently published an article that we thought did an excellent job of explaining the surge in lumber prices. You can read the complete article here. Here is a bullet point summary of the items discussed in the article:

• Many sawmills closed down during the recession of 2008 – 2009, reducing supply.
  
  
• Tarriffs on Canadian softwood lumber have increased prices.
  
  
• West coast wildfires have reduced supply.
  
  
• COVID sbutdowns at sawmills reduced supply.
  
  
• Millions of people being forced to stay home increased demand.
  
  
• The demand for housing is greatly outpacing supply, driving materials prices higher as builders try to keep up with demand.

In other words, a whole bunch of things crashed together at the same time to send wood prices to the moon. The board foot price of wood is up about 375% in the last year. We expect this situation to normalize…eventually. Any time there is a market with such demand, entrepreneurs will step in to provide more of the product. Supply-and-demand free market economics works if you let it (somebody should tell our government that). The lesson for all of us in the construction industry is that we have got to keep a macro-level view of what is happening in the world and how it will affect our work going forward.