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Other Building Materials Keep Costs Up as Lumber Prices Fall

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Building Materials

Other Building Materials Keep Costs Up as Lumber Prices Fall


July 19, 2021
home construction
Photo: Paul Maguire | stock.adobe.com

The National Association of Home Builders estimated the cost of lumber added $35,872 to the cost of a new single-family home back in April. Now that lumber prices are lower, the association estimates new homes cost $29,833 more. The difference may seem higher than expected, given the recent dramatic price falls, but the NAHB says plywood, OSB, particleboard, fiberboard, shakes, and shingles also influence the cost. And framing lumber costs remain double the price they were in April 2020. The average new single-family home uses more than 2,200 square feet of softwood plywood and more than 6,800 square feet of OSB, says the NAHB.

Moreover, unlike framing lumber, prices of these items have not declined substantially in the recent past.  In fact, since April of 2020, the price of softwood plywood has increased by more than 200 percent, and the price of OSB has gone up by nearly 500 percent.

At the prices reported by Random Lengths on April 17, 2020, the total cost to a builder for all the softwood lumber products going into a home was $16,927 for the products in an average single-family home, and $5,940 for the products in an average multifamily home.

Currently, based on Random Lengths prices reported on July 08, 2021, the costs have risen to $42,882 for the softwood lumber products in an average single-family, and $14,631 for the products in an average multifamily, home.  These number represent a 153 percent ($25,955) and 146 percent ($8,691) increase in single-family and multifamily builders’ softwood lumber costs, respectively.

Prices to home buyers go up somewhat more than this, due to factors such as interest on construction loans, brokers’ fees, and margins required to attract capital and get construction loans underwritten.  As explained in NAHB’s recent study on regulatory costs, for items used during the construction process, the final home price will increase by 14.94 percent above the builder’s cost.

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