Volatile lumber costs driving home prices higher

Volatile lumber costs driving home prices higher

Volatile lumber costs driving home prices higher
The price of lumber is up 170 percent over the past 10 months to a new record high. As a result of this soaring cost, builders are raising the prices on newly built homes. According to the National Association of Home Builders, tariffs on Canadian lumber builders are adding thousands of dollars to the price tags for new homes or slowing down their projects altogether.

The NAHB reported that a home built in 2020 cost $16,000 more to build than in the prior year due entirely to lumber prices and likely even higher in 2021.

The higher prices for newly built homes is not only keeping some buyers on the sidelines but also complicating the purchase process for others as appraisers are not factoring in the higher lumber costs when valuing the home. The NAHB reports that this is disrupting home sales and preventing closings.

Meanwhile, conforming no-point 30-year fixed mortgage rates are averaging 2.75 percent and 15-year rates are near 2.25 percent.

Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.