US lumber prices skyrocket 250% as Covid drives home-buying demand higher

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This post originally appeared on RT Business News

US lumber prices skyrocket 250% as Covid drives home-buying demand higher

Prices for lumber managed to grab the headlines after an unprecedented sharp increase which currently threatens housing affordability across the United States.

“Lumber prices have skyrocketed nearly 250% since April 2020. This price spike has caused the price of an average new single-family home to increase by more than $ 24,000,” reported the National Association of Home Builders.

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On Monday, the May futures contract price per thousand board feet of two-by-fours reportedly surged from $ 48 to $ 1,420. The moonshot reportedly caused lumber trading to halt for the day.

“The market is in trouble. It could spiral out of control in the next few months,” Dustin Jalbert, senior economist at Fastmarkets RISI said as quoted by Fortune.

According to the expert, the backlogged supply is not able to catch up with the demand that keeps growing after the season of home building and home renovation were opened.

Apart from steadily increasing home construction, the price spike is attributed to the supply chain that is getting disrupted by Covid-19-related lumber yard shutdowns, Gary Poulos, lumber division president for Mill Creek Lumber & Supply told one of the local media outlets.

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The official added that the pandemic-related transportation issues exacerbated the surge in prices. Moreover, extreme winter weather also caused a shutdown of Gulf Coast refineries, causing an unavoidable shortage of other building supplies.

Lumber prices are expected to grow for quite some time amid soaring lumber futures contracts, including those for November, Stinson Dean, CEO of Deacon Lumber, told Fortune.

Prices are expected to correct only if demand cools down, which is not likely to occur until the home building and renovation seasons are over.

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