Published June 7th, 2021
If you have tried to start a new project lately, like that summer-time deck, then you've likely seen lumber prices soar out of control. As of June 2021, lumber was still priced at $1,300 per thousand board feet. Although this is down slightly from the peak high in May of $1700, this is still several times higher than the pre-pandemic numbers. The main factors that have affected wood prices are demand and staffing shortages.
When COVID-19 hit, people were forced to stay home. Some states required full lockdowns and other businesses began letting employees work remotely. Once people stopped commuting to their 40 plus hour work weeks, they began to have an increased amount of time on their hands. They now had the time to build the deck they had been meaning to get around to. Or to remodel that kitchen that looked like it was straight out of 1975. Now you suddenly had an increased number of customers buying lumber for their private use.
Not Enough Staff
During the pandemic, factories and production lines were forced to adopt safety guidelines. This meant fewer people working during a shift to comply with things like social distancing regulations. This caused production to slow and some people were laid off temporarily. Other production locations were even required to temporarily close due to safety concerns. This began to create a shortage in the lumber supply chain.
Once people were out of work, they began drawing unemployment. Instead of getting the minimum unemployment benefits, people also began receiving a $300 bonus in addition to their weekly payout. In some states, they also got an additional bonus on top of the federal $300 bonus. This meant that a lot of people were now getting paid more than they made at their job.
This resulted in a lot of people choosing to remain unemployed instead of returning to work. Some also felt the risk of contracting COVID-19 was just too high and wanted to wait until things improved. Without enough workers, production wasn't able to keep up with the lumber demand. Since lumber was now short, this caused prices to soar.
Will Prices Come Down?
While the cost of lumber has decreased since May, it is still much higher than pre-pandemic prices. After a supply chain is disrupted, it can take a long time for producers to catch back up and prices will likely stay elevated until they do. Fed up, organizations like the National Association of Home Builders have reached out to the Biden Administration and other government officials demanding action. Commerce Secretary Gina Raimondo met with the group and promised to take the issue seriously.
While we hope prices will come back down, all we can do now is wait and see. Are you ready to start your own business in this high-demand field? Please contact us today so that the Arizona Contractor Center can get you on the path to success.