What’s Causing the Historic Increase in the Price of Lumber?

Written by Morgan Kaenzig de Denus, AMAST Content

In the past year, the price of lumber has skyrocketed. In March of 2020, the Random Lengths Composite Index closed around $460 per 1,000 board foot of lumber. This March, the Random Lengths Composite Index closed at around $1,300 per 1,000 board foot of lumber. While this drastic change can feel like it came out of nowhere, there are several driving factors behind the rise in the cost of lumber.

COVID-19

The Demand Has Been High

People haven’t just been renovating their homes. With the ability to work from home and the desire for more space, many individuals took advantage of the lower mortgage rates and bought homes or decided to construct new ones. These larger projects further depleted the supply of lumber and contributed to the rise in the cost of lumber.

The Supply Has Been Low

At the onset of the pandemic, lumber mills and factories were shut down. When they reopened, they had new social distancing guidelines and could be closed if any employee tested positive for COVID-19. Demand was spiking due to the increase in DIY projects, renovations, and construction projects, and the lumber industry couldn’t keep up.

The Mountain Pine Beetle

These beetles attack many different kinds of pine trees, including ponderosa, lodgepole, whitebark, limber, jack, and western white. The female beetles eat galleries into a tree’s inner bark. They lay their eggs there and, once the eggs hatch, the larvae continue to eat the tree. Once they are grown, the beetles will look for new trees. They can relocate to a tree over sixty miles away from the one they were born in, making the spread of Dendroctonus ponderosae widespread and difficult to control.

The Mountain Pine Beetle in Canada

What Happens Next?

Sources

Government of Canada. (2020, September 21). Mountain Pine Beetle. Retrieved April 03, 2021, from https://www.nrcan.gc.ca/our-natural-resources/forests-forestry/wildland-fires-insects-disturban/top-forest-insects-diseases-cana/mountain-pine-beetle/13381

Lambert, L. (2021, March 22). Lumber Prices Are Up A Staggering 188% — When Will The Wood Shortage End? Retrieved April 4, 2021, from https://fortune.com/2021/03/20/lumber-prices-2021-chart-when-will-wood-shortage-end-price-of-lumber-go-down-home-sales-cost-update-march/

Sheffey, A. (2021, March 18). Surging Lumber Costs Have Increased the Average Cost of a New House by $24,000. Retrieved April 3, 2021, from https://www.businessinsider.com/real-estate-homebuying-soaring-lumber-prices-new-homes-construction-2021-3

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