Lumber Prices Fuel Overall Increases in Prices Paid for Residential Construction

September 14, 2020
Worker measuring lumber

Prices paid for goods used in residential construction increased even more in August, mainly pushed up by increasing softwood lumber prices. According to the Producer Price Index report by the Bureau of Labor Statistics, prices paid for goods grew by 0.9% last month on a not seasonally adjusted basis. This makes the fourth consecutive month prices have increased, which NAHB says is due to the rise in softwood lumber prices. In August, softwood lumber prices jumped by 14.9%, which is a 50% increase since April. The last time a four-month gain was as high was back in 1949.

It is the second-largest increase since seasonally adjusted data has been available since 1975. The index has decreased 1.3% year-to-date (YTD), a larger decline than the prior record for a July YTD decrease (-0.9% in 2000). Prices paid for goods used in residential construction have only fallen five times between January and June since 2000.

In addition to nominal price increases and tariffs on Canadian lumber, cross-border purchasers have been hurt by a weakening U.S. dollar (USD) in recent months. Since late-March, the USD has depreciated nearly 10%.

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