![lumber prices skyrocket lumber prices skyrocket](https://ewscripps.brightspotcdn.com/dims4/default/43522b4/2147483647/strip/true/crop/3296x1730+0+62/resize/1200x630!/quality/90/?url=https:%2F%2Fewscripps.brightspotcdn.com%2Ff1%2F6f%2F1891f71b4b359c2d1300c6d4f551%2Fpandemic-causes-lumber-prices-to-soar.png)
A housing start is when excavation begins for the footings or foundation of a new home, in this graph you can see that just before the pandemic the housing market was beginning to tick up. In this video below Dave refers to a graph of housing starts in the US for the past 5 years from federal reserve data.
#Lumber prices skyrocket driver#
So what about the demand side? Well, the number one driver of lumber demand in the U.S is the housing market and so to predict the price of lumber in the coming year we really need to understand what is coming for the housing market. For those events, we will just have to wait and see how it unfolds to determine how prices could ultimately be impacted. There are other factors impacting supply as well but it is a bit harder to predict things like forest fires or adverse weather events such as hurricanes or climate change that could also impact supply. There is plenty of standing timber, there are plenty of sawmills that are working constantly- but unless the transportation factor can get figured out, lumber prices in 2022 could be pushed higher. Photo Credit: fact, I’ve seen some timber spoil when it has been exposed to the elements for too long on the supply side. There are shortages of truck drivers, rail cars, and workers and it has not been uncommon over the past year to see lumber stacked high at rail yards and warehouses just waiting until it can be moved. Like every product right now, logistics are challenging. Lumber is heavy and most often transported via rail but sometimes transported by truck. A portion of the cost of the lumber is the cost to transport it from one place to another.
![lumber prices skyrocket lumber prices skyrocket](https://www.housingwire.com/wp-content/uploads/2020/09/new-home-construction.jpeg)
![lumber prices skyrocket lumber prices skyrocket](https://www.hotelsuniversity.com/wp-content/uploads/2021/05/Skyrocketing-Lumber-Prices-Body-01-300x279.jpg)
Most lumber is harvested and processed in rural areas far away from cities and suburbs. The bad news on the supply side remains focused on transportation. It is not cost-effective to run some of those mills, but generally, at the price that we are seeing now, the sawmills will produce as much as possible to take advantage of high prices. That being said, sawmills may still limit production if they feel that prices drop too low. What they are doing will help ensure that there is enough supply to go around. However, they could definitely be doing more. They’re investing in building new sawmills or making their existing sawmill more efficient. The good news is that lumber companies are using at least part of their massive windfall from 2021. It takes a lot of work to harvest and mill lumber, and new lumber mills sometimes take millions of dollars and years to build. What about the harvesting and processing of lumber, that’s where we’ve seen bottlenecks in the past few years. So there’s no shortage of standing timber. Given that timber is a renewable resource that is constantly being replenished, that supply could last indefinitely. This means that there is over a 30 year supply of standing timber just in the south alone. They harvest an estimated 280 million tons every year. Take just the southern US alone, there is an estimated 12 billion tons of standing timber. The good news here is that in the U.S there are plenty of trees. In order to determine where the prices are headed, we need to analyze what impacts lumber supply and lumber demand. Photo Credit: Determining Impacts of Lumber Supply That caused the price of shipping pallets to double which then, in turn, impacted the cost of shipping and drove inflation even higher. In fact, in 2021, there was a shortage of shipping pallets in the world. So when the price of lumber goes up it can cause the prices of a lot of things to go up. Things from homes to toys to furniture, even concrete forms used in construction, shipping pallets and so much more. Wood is a major component of many products produced throughout the world and in the U.S specifically. So what’s coming in 2022? Will prices drop or they will skyrocket again? Well in this video Dave will examine that question and explain lumber prices and projections for 2022. Since then, the price stabilized a bit but has recently started to creep up again. Early in the pandemic, the prices went as low as $260 per thousand board then all the way up to $1600 earlier this year. Pre-pandemic of lumber was around $400 per thousand board feet. Lumber prices have gone crazy in the past 2 years.
![lumber prices skyrocket lumber prices skyrocket](https://www.castanet.net/content/2021/5/screen_shot_2021-05-12_at_10.34.45_am_p3530372.jpg)
Where are Lumber Prices Going in 2022? By DIY with Dave