Early on in 2020, when the pandemic was just getting noticed, lumber prices slumped. From early March to mid-June, prices plummeted and held at a relatively low mark.

When the global shutdown was put in place, construction operations in most locations were shut down, and lumber mills were left with an excess supply. So, how could lumber increase from roughly $250 per 1000 board feet to over $850 per 1000 board feet?

Over the past few months in the US, due to the fragility in the economy, interest rates were at an all-time low. Low-interest rates for home mortgages and new construction financing led to a boom in the remodeling and building industries when businesses opened their doors.

Frankly, the boom in the building industry was a shock to the system in the lumber industry. Mills went from having an excess supply of wood to a shortfall in what seems like overnight.

As the demand for lumber continued to grow, supply could not catch up, resulting in an increase in lumber costs by 340% or more in many locations.

But are we turning the corner? As of a few weeks ago, the price per 1000 board feet fell to $114. That’s a 20% drop in price. So how could there be such a drastic change in costs – well, people are fed up and are refusing to pay the exorbitant price for lumber.

Even with new home construction down 8.8% from the 14-year high set in March and with home-improvement sales down and prices soaring to their highest in March, a perfect recipe for a price correction was put in place.

We will continue to see lumber prices incrementally drop and new home construction and remodeling increase to find a balance. Many homeowners who were stuck at home, unable to travel, found a different meaning of what a home means and how it can be best used.

If you’re looking to begin your next project or buildout, give BRP Construction a call at 225-636-6621 or email brian@brp.construction.