The demand for single-family homes remains a promising spot for the economy, but expensive lumber prices may limit what can be done to meet the demand. Since April, lumber prices have increased by 80%, according to NAHB. The average price per thousand board feet is now $627, resulting in thousands more spent for new home construction. Rising lumber prices and Canadian tariffs create a ripple effect: housing supply will be further constrained, new homes will be more expensive, and the housing industry’s impact on the economy will be stifled.
Solid demand for housing is clear in both new and existing home markets. New single-family home sales jumped 14% in June to a 776,000 annualized pace per Census estimates. For the first half of the year, despite the recession of 2020, new home sales are up 3% compared to the first half of 2019. Sales-adjusted inventory is at just a 4.7-month supply. According to data from the National Association of Realtors, completed June resales were up 20% compared to May, but still down 11% compared to a year ago. However, that deficit is beginning to close: Pending home resales are up 6% compared to a year ago in June, having now returned to pre-pandemic levels.