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Supply and Demand: No end in sight for sky-rocketing lumber prices
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Supply and Demand: No end in sight for sky-rocketing lumber prices

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While the COVID-19 pandemic allowed people to become self-proclaimed Do-It-Yourself experts while taking advantage of free time that working from home provided, many projects are now being put on hold or completely abandoned due to skyrocketing lumber costs.

Since March 2020, the cost of lumber has steadily risen and reached prices as high as 400% in some areas. Lumber is sold on an open market, meaning with supply-and-demand changes, it is normal for the price to fluctuate.

At the Woodpile in Dothan, General Manager William Johnson said a typical piece of OSB plywood that was priced around $10 last year now costs around $40.

“It started as soon as the pandemic began last year,” Johnson said. “We knew it was going to be higher than normal; we expected that. What we did not expect was the shortage at all of the mills, and that still hasn’t gotten any relief.”

According to Forbes, it was observed in December 2020 and again in February 2021 “that the lumber futures curve was inverted and relatively flat, meaning the nearby price of lumber was higher than the price of lumber further into the future, but that prices further out were not at enough of a discount to indicate an imminent easing of prices.”

Johnson said currently products that once came in quickly can now take up to six months to ship. This has made planning, ordering, and keeping up with the demand almost impossible for most suppliers.

Although smaller home projects, like decks and patios, have slowed down as lumber prices have risen, products used by home builders are still in high demand, Johnson said.

The housing market boom can be attributed to low mortgage rates, record lows in inventory, and record time spent on the market, which can be a matter of hours in some cases.

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“From the first scrape of the ground that a contractor does for a home, it’s basically sold,” Johnson said. “The home-building market is exceptionally strong right now, which is definitely adding to the supply shortage.”

According to the National Association of Home Builders, the price hikes on lumber have increased the cost of building a single-family home by about $36,000 and $13,000 for a multi-family home.

Samson residents Lisa Ward and her husband Joe recently sold their home with the hope of building a new one closer to her mother, who has dementia. However, they are now living in an RV with their four dogs behind her mother’s house, hoping the higher prices to construct a new home will decrease.

According to their contractor, their new home will cost about four times more than what their previous home cost to build due to the exponential increase in supply prices.

“We knew there was a shortage in lumber and supplies, but we didn’t put enough stock into it to really be prepared until we had already put our house on the market,” Ward said. “It sold the same day it was listed with a realtor.”

Ward said after their home sold and they saw the price tag of building a new one, they were at a loss on their next decision.

“While we were trying to decide, I ended up seeing an RV for sale online for a good price and at the moment it just seemed like the right thing to do,” Ward said. “Even though this isn’t what we had planned, we are still blessed to have found an alternative option for the time being.”

Now they are worried that waiting might not pay off. Ward said moving forward with a purchase might be the best option in hopes of avoiding another price spike. Johnson at The Woodpile agreed.

Johnson said he doesn’t expect any price drops for another year at least for supplies because the home construction market is booming with high demand.

“Honestly, I think we are at a new normal for home building supplies,” including lumber, Johnson said. “Unless you have about two years to wait, don’t. Go ahead and buy because everything to a build a home is going up right now, all the way down to a tube of caulk.”

Sydney McDonald is a Dothan Eagle staff writer and can be reached at smcdonald@dothaneagle.com or 334.712.7906. Support her work and that of other Eagle journalists by purchasing a digital subscription today at dothaneagle.com.

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