NAHB: Volatile lumber prices add more than $14,000 to new home construction
July 22, 2022
The National Association of Home Builders recently reported that the unstable cost of lumber has added on average more than $14,000 to newly-built single-family homes.
Citing a recent Department of Housing and Urban Development/U.S. Census Bureau Rental Finance Survey, NAHB says that the $14,345 cost translates in multifamily construction to $51 a month more in rent for a new apartment.
NAHB, referencing July 1 Random Lengths prices, says costs have risen to $29,407 for the softwood lumber products in an average single-family home, and $10,734 for the products in an average multifamily home. These numbers represent an increase of $12,480 (74%) and $4,795 (81%) in single-family and multifamily builders’ softwood lumber costs, respectively.
Construction loans interest, brokers’ fees, and margins all increase prices to home buyers, and according to NAHB’s study on regulatory costs, the final home price will increase by 14.94% above the builder’s cost.
These costs, along with rising mortgage rates and supply chain disruptions have brought housing starts to a two-year low. For the first time since June 2020, both single-family starts and permits fell below a 1 million annual pace.
NAHB and other groups such as the National Lumber and Building Material Dealers Association have urged Congress to take action to curb the rising costs of homeownership.