Currently Reading

U.S. Sawmill Production Fails to Keep Pace With Housing Demand for Lumber

Advertisement
NAHB

U.S. Sawmill Production Fails to Keep Pace With Housing Demand for Lumber

NAHB Policy Briefing | Insufficient production is causing an unprecedented spike in lumber prices as sawmill output fails to keep up with consumer demand and housing starts outpace lumber production


By National Association of Home Builders January 28, 2022
Sawmill lumber inspection
A slow reaction by sawmills amid strong demand for lumber during the pandemic has resulted in record-breaking lumber prices. | Photo: U.S. Department of Agriculture (CC by 2.0)
This article first appeared in the February 2022 issue of Pro Builder.

The residential construction industry faced many challenges in 2021, but none as big as the high price and inconsistent supply of lumber.

A slow reaction by sawmills amid strong demand for new homes and a significant uptick in demand from do-it-yourselfers and big-box retailers during the pandemic resulted in lumber prices peaking at a record-shattering $1,500 per thousand board feet in May 2021.

Despite a gradual decline through late August, prices have begun to rise again, with several factors contributing to the recent spike, including ongoing supply chain disruptions, a doubling of tariffs on Canadian lumber imports into the U.S. market, and an unusually intense summer wildfire season in the western U.S. and in British Columbia.


RELATED


Central to the rising prices, however, is the failure of U.S. sawmills to boost output at a pace sufficient to meet strong and consistent consumer demand for newly built homes (see chart, below).

The lumber industry has cited ongoing challenges with labor as a key reason for the insufficient lumber production, but U.S. Bureau of Labor Statistics figures indicate sawmill employment is rising—up 2.4% in October 2021 (the latest data available)—a net gain of 2,100 jobs, since October 2020. Mean-while, residential construction employment was up 4%, or a net gain of 118,500 jobs, over the same time period.

Also, the most recent U.S. Bureau of Economic Analysis numbers demonstrate that the seasonally adjusted rate of sawmill output in September 2021 was 1.2% higher year over year. However, output in Q3 2021 was 1.3% lower than it was in Q3 2020.

Housing starts are outpacing lumber production

Even as strong consumer demand for new homes continues and sawmill employment returns to pre-pandemic levels, softwood lumber production continues to fall short. The result is record-high lumber prices that are driving up the cost of new single- and multifamily homes, according to National Association of Home Builders’ analysis of various federal data sources (shown below), which compare single-family starts and sawmill output, indexed so 2012 levels equal 100.

Chart showing 2020-21 sawmill production compared with single-family housing starts
Photos: top, nullplus / stock.adobe.com; bottom, trekandphoto / stock.adobe.com

The growing gap between the two measures is the reason for the dramatic increase in lumber prices. Note that single-family starts were up 13.6% in 2020 and are up 15.7% year-to-date in 2021. While sawmill production did increase in 2020, that rise in output was not sufficient to keep up with the demand from residential construction.

The shortfall in softwood lumber output relative to new-home demand continued in 2021, and key indicators suggest housing production will keep outpacing lumber production into 2022.

 

Written By

The National Association of Home Builders (NAHB) is a Washington, D.C.-based trade association representing more than 140,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing, and other aspects of residential and light commercial construction. For more, visit nahb.orgFacebook.com/NAHBhomeTwitter.com/NAHBhome

Related Stories

Building Materials

Prices for Building Materials Posted Another Gain in May

The most recent PPI report offers little relief for builders bogged down by record high prices for building materials

Opinion

Housing's New Now

There is no "new normal," only now. Use this time after the height of the pandemic and its upheaval to set the stage for sustainable success for your business

NAHB

NAHB Chairman’s Message: Members Urge Action on Housing Crisis

The National Association of Home Builders is relying on strength in its membership numbers to press the issue of housing affordability with the White House and Congress

Advertisement
Advertisement

More in Category




Advertisement
Advertisement

Create an account

By creating an account, you agree to Pro Builder's terms of service and privacy policy.


Daily Feed Newsletter

Get Pro Builder in your inbox

Each day, Pro Builder's editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.

Save the stories you care about

Lorem ipsum dolor sit amet lorem ipsum dolor sit amet lorem ipsum dolor sit amet.

The bookmark icon allows you to save any story to your account to read it later
Tap it once to save, and tap it again to unsave

It looks like you’re using an ad-blocker!

Pro Builder is an advertisting supported site and we noticed you have ad-blocking enabled in your browser. There are two ways you can keep reading:

Disable your ad-blocker
Disable now
Subscribe to Pro Builder
Subscribe
Already a member? Sign in
Become a Member

Subscribe to Pro Builder for unlimited access

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.