High lumber prices return with a vengeance

After a brief reprieve over the summer, lumber prices are once again on the move. The rising cost of lumber in the U.S. and Canda have led to a surge in construction costs including residential projects. Framing lumber has risen 40 percent since August and appear to be continuing their upwards trek. Last week, lumber futures were trading for about $735 per 1,000 feet. While this is still below the peak reached last May when it was $1,515, it is more than double the pre-pandemic five-year average of $356. This information is according to National Mortgage News’ tracking of construction costs.

As a critical component in the construction of new housing, rising costs of lumber are often passed on from builders to home buyers. The rising cost of construction added $36,000, on average, to the price of a new home.

Home builders anticipate that lumber prices will continue to climb over the next several months as demand remains high. Supply shortages and delays in producing raw goods used in construction projects was made worse due to the coronavirus.

Today, conforming no-point 30-year fixed mortgage rates are averaging 2.875 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 (877) 700-0942 and your questions may be featured in an upcoming article.