Soaring lumber prices add nearly $36,000 to construction of new home

Building material prices have by and large been steadily rising since 2020 and were up across the board in March

Residential construction has been a bright spot in the burgeoning U.S. economic recovery, despite lumber prices that have tripled over the past year.

According to the National Association of Home Builders (NAHB) Economics team, soaring lumber prices have caused the price of an average new single-family home to increase by $35,872.

This lumber price hike has also added nearly $13,000 to the market value of an average new multifamily home, which translates into households paying $119 a month more to rent a new apartment.

Further adding to affordability woes, building material prices have by and large been steadily rising since 2020 and were up across the board in March.

The latest Random Lengths prices as of the week ending on April 23 show the price of framing lumber near $1,200 per thousand board feet — up nearly 250% since last April when the price was roughly $350 per thousand board feet.

NAHB calculated these average home price increases based on the softwood lumber that goes into the average new home, as captured in the Builder Practices Survey conducted by Home Innovation Research Labs. Included is any softwood used in structural framing (including beams, joists, headers, rafters and trusses), sheathing, flooring and underlayment, interior wall and ceiling finishing, cabinets, doors, windows, roofing, siding, soffit and fascia, and exterior features such as garages, porches, decks, railing, fences and landscape walls.

Why lumber prices have surged

These unprecedented lumber price hikes are a result of reduced production at lumber mills last spring due to stay-at-home orders and social distancing measures enacted by state and local governments at the onset of the coronavirus pandemic. In addition, when it became clear in the ensuing months that demand for housing remained strong, lumber mills did not ramp up production accordingly.

Price volatility has been exacerbated by tariffs on Canadian lumber imports into the U.S. market.