As building materials prices spiked over the course of 2020 and 2021, this issue — once the sole issue of contractors and their customers — slowly became a “dinner table material” topic of public interest.
While the peaks of the market price of lumber and subsequent shortages have climbed through a year full of DIY projects and record levels of home-building plans, there appear to be signs that the era prices hovering around $1,600 per thousand board feet may be coming to an end.
However, the fallout over the market’s unprecedented year will continue to be felt in the short and long terms, and that involves other materials such as steel, copper, and concrete — and that still has plenty of current and potential buyers on edge about whether to resume or even start on certain projects.
It was widely reported throughout the COVID-19 pandemic that lumber — the primary building material used for domestic construction projects — added as much as $14,000 to the now-estimated $36,000 to the price of a new home.
Even for those who just wanted to develop, or improve, small parts of their established properties such as new cabinets or existing patios find themselves in an unenviable position for any ready-to-starter: Either pay record-high prices now and wait months for arrival — or wait in hopes of paying more pre-pandemic averages as supply becomes more readily available.
Such was the case for stay-at-home mother Alison Glass as she discovered that replacing the kitchen cabinets in her newly bought Winfield, West Virginia home would run $15,000 in comparison to her initial less than $10,000 estimate. So, Glass opted to call national franchise N-Hance, who assisted her with preserving her household cabinet’s inner structure while simply replacing and repainting their faces at around $6,000.
This micro-scenario seems to reflect a wide pattern facing the current industry landscape when it comes to lumber pricing’s seemingly imminent freefall, as the “cash price” that sawmills charge distributors fell to $1,446 from the previous weeks’ high of $1,515 in early June, according to industry trade publication Random Lengths.
While news of the drop appears to be a sign of hope, experts caution not to take this as a return to pre-pandemic lumber prices of $358 per thousand board feet. With a relative “damned if do or do not” scenario facing both contractors and consumers, both parties have explored alternatives with varying results.
Why don’t contractors pivot away from lumber framing?
Lumber is not the only building material that has experienced a price rally or shortage, as the times eventually caught up with such materials as steel, copper, and concrete.
In various pockets of 2020, as the cost of lumber was soaring but the aforementioned supplies remained relatively stable, some contractors- mostly residential but some industrial- explored abandoning lumber altogether on projects as they grew impatient with high prices and long waits from mills.
Nathan Powell with Salem, Oregon’s PNM Construction spoke over Zoom about a project that he and his colleagues debated — and eventually went through with — switching out portions of wood framing for steel to save on overall cost.
Becoming Construction Manager/General Contractor on a client’s two-story, 20,000 square foot office building, Powell engaged in talks over last summer with bids due by November of that year. As widely reported, that’s when lumber prices began their ascent.
Powell went on to explain that the inflation of lumber and experience on a previous project where metal stud framing was successfully implemented at a lower cost forced him to draw up an alternate on his bid packages.
“Essentially we didn’t want to re-engineer the building,” Powell said. “It was all engineered as wood.”
PNM would not change the structural wooden components, but did pitch for nonbarriers, shear walls, and soffits to be included as metal studs.
After finalizing pricing in January of this year, Powell remarked that while the savings weren’t “massive,” the $5,000 in saved money caught him by surprise as lumber costs had already risen by 25% at the time.
While the project did encounter delays and shortages related to steel pricing’s almost equally tumultuous seesaw as its wooden counterpart, Powell was pleased to say the project was a success and can be a sign of hybridization of two scarce materials in cases where innovation and cost align.
On a wider scale, a recent survey conducted by the National Association of Home Builders reveals that the biggest barrier for contractors in pivoting from lumber isn’t predominantly the alternatives’ just-as-rocky market prices, but that they lacked enough workers or subcontractors with ample enough experience with other structures to make the switch away from wooden frames, which is used in almost 90% of all residential projects.
For homeowners seeking immediate progress for less, the outlook seems brighter than it did in months prior but it’s still quite bleak and confusing.
Chuck Fowke, chairman of NAHB as well as a builder of custom-designed homes in Tampa, Florida, states many of his customers have shown doubt over committing to projects as materials prices fluctuate.
“They’re looking at the commodities market almost like Las Vegas, and they were looking at [the $1,600 per board foot price,] he says. “Now they’re predicting that in September or October, those prices are going to fall to the $800 and $900 range.”
The futures market, as exemplified by last fall’s peak and valley ride, is purely predictive and by no means a concrete manner of locking pricing. However, the recent downswing in the price of lumber has many contractors optimistic that stabilization, albeit not where it historically stood before, is in sight within the next two years.
With many experts believing lumber prices are likely to remain higher than the last three decades’ historical of around $200 to $400- say, ideally, $500-$800, they caution that the materials pricing is a new normal that both consumers and builders must accept moving forward even as they put the pandemic behind them.
Founder and CEO of Deacon Trading, Stinson Dean, told Business Insider in June 2021 that his “argument is the ‘new normal’ is going to be significantly higher than the ‘old normal’,” as the lumber market continues to see the materials supply and demand reaching a point of almost equilibrium.