In mid-September, framing lumber prices peaked at an all-time high and have been on a downward trajectory ever since.
Since mid-April lumber prices have risen approximately 120% to their September high but have retreated a full 20% from mid-September to mid-October. Builders report that this price spike added approximately $16,000 to the price of a typical new home.
The price drop of lumber comes on the heels of National Association of HomeBuilders lobbying the White House to urge domestic lumber producers to increase production levels to ease the shortages and to end the 20% tariff on Canadian lumber coming into the US. The domestic supply chain shortages were attributed to the Covid 19 pandemic.
Meanwhile, sales of new homes in the US outpace starts by a healthy margin.
Housing demand is so strong right now that the gap between closed sales and new home starts is at an unprecedented level. Nationally, there was a nearly 5% increase in sales of single family new homes in August of this year alone. The acceleration of housing demand is at the highest pace since Sept 2006. Additionally, presales of as-yet unbuilt homes were nearly 70% higher this August than last.
Historically low interest rates are contributing to this on-going surge but also at play is a consumer taste that is shifting toward lower density markets like the Triad. Unfortunately, this high demand is met with a historically low inventory of available homes. Nationally, inventory of new single-family homes has fallen to just over a 3-month supply with even lower numbers for the Carolinas. These are the lowest numbers our country has seen since 1963.