Supply issues resulting from British Columbia’s record rainfall and increased demand are pushing lumber prices higher, reducing housing affordability heading into the new year.
According to Random Lengths, lumber prices have nearly tripled since August, surging to more than $1,000USD per thousand board feet. As a result, the National Association of Home Builders (NAHB) estimates the average price of a new single-family home has increased by more than $18,600USD.
While Canadian numbers weren’t available, similar price increases in Canadian dollars would add more than $23,500 to the price of a new home, disrupting the housing market and adding to the ongoing affordability crunch.
However, according to Liz Kovach, president of the Western Retail Lumber Association, Canadian consumers shouldn’t be as worried about rising lumber costs as those south of the border.
“If you’re listening to what’s happening in the U.S., they are paying tariffs on lumber prices,” Kovach said. “They’re going to see higher prices simply because they’ve implemented tariffs on Canadian lumber so that cost is getting passed on to the consumer.”
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Lumber’s rollercoaster price volatility dates back to the start of the COVID-19 pandemic. Anticipating reduced demand, sawmills pulled back on production in spring 2020, then had trouble meeting demand from an unexpectedly hot housing market and renovation projects ramping up.
Prices surged to more than $1,500USD per thousand board feet in May 2021 before a combination of increased lumber production and reduced renovation demand brought prices back to earth, bottoming out at $389USD in August.
However, prices gradually crept up through the fall, climbing past $600USD in November before surging last month. Lumber saw a weekly record price gain of $129USD in late December, with buyers trying to lock in prices in advance of U.S. tariffs on Canadian softwood doubling.
The increased demand resulted from the U.S. Department of Commerce imposing average duties of 17.9 per cent on softwood lumber imported from Canada, twice the previous rate of 8.99 per cent.
Additional factors behind the latest price push include hot and dry conditions stoking a destructive summer wildfire season along the West Coast, as well as supply chain disruptions stemming from B.C.’s record rainfall in November.
Several B.C. roadways and rail lines were damaged by flooding and landslides, contributing to a supply chain bottleneck at the Port of Vancouver. Lumber shipments were delayed, causing a supply crunch and pushing prices up as home builder demand remained high.
It remains to be seen whether lumber prices will continue their upward trajectory into the spring, as construction projects ramp up and demand increases.