With Lumber in Short Supply, Record Wood Costs Are Set to Juice Home Prices
01 Marzo 2018 - 9:29AM
Noticias Dow Jones
By Benjamin Parkin
A lumber shortage has pushed prices to record highs as builders
stock up for what is expected to be one of the busiest construction
seasons in years.
Builders say the higher lumber costs are making homes more
expensive. Lumber prices started rising last year after fires
destroyed prime forests and a trade dispute between the U.S. and
Canada restricted supplies. Now a shortage of railcars and trucks
is forcing builders to pay even more.
"We are in a lumber supply crisis," said Stinson Dean, a broker
in Kansas City, Mo., who ships wood from sawmills to lumber yards,
in a note to clients. "None of us have experienced a market like
this."
Marc Towne of Classic Homes, which builds midrange to high-end
houses in Colorado Springs, Colo., said he is spending $8,500 more
on lumber for a typical home than a year ago, an increase of almost
40%. The company's passing on about half the cost to buyers for now
while it waits to see if lumber prices fall.
"We hate to give large increases all at once because it can
freeze your market," Mr. Towne said. High lumber costs added about
$3,000 to the price of a home he purchased himself in Castle Rock,
Colo., late last year.
Prices are rising as lumber yards try to stock up ahead of what
looks likely to be a busy building season this spring. A strong
economy and tight supply of houses are heating up the home-building
market. The number of new units under construction in the U.S. rose
almost 10% in January, the Commerce Department said, as strong
demand kept builders working through the winter. Permits for new
homes, a sign of anticipated construction, also rose.
Material prices now rival labor shortages as builders' main
concerns, a National Association of Home Builders survey showed in
January. Prices for common building varieties like spruce and
southern pine are at or near records, according to price-tracking
publication Random Lengths. March-dated lumber futures at the
Chicago Mercantile Exchange hit a record of $532.60 per 1,000 board
feet last week after climbing more than 50% in 14 months.
That run-up began with a trade dispute between the U.S. and
Canada, which provides about a third of U.S. timber, leaving many
dealers hesitant to restock at elevated prices. The Trump
administration eventually instituted tariffs of 20% or more on
Canadian sawmills.
Problems mounted. The worst wildfires on record hit Canada's
Pacific coast. Hurricane Irma temporarily closed mills in the
forests of Florida and Georgia. And then came a shortage of
railcars and trucks to transport timber from forests in places like
the Pacific Northwest. Rates for flatbed trucks rose 24% in January
from a year earlier, according to DAT Solutions LLC.
Forestry company Canfor Corp. said lumber shipments fell almost
10% in the final quarter of 2017, partly due to bad weather in
western Canada. The transportation bottlenecks have caused weeks of
delays, frustrating customers already paying record prices.
"People are screaming for their wood," said Russell Taylor,
managing director for Canada at analysis firm Forest Economic
Advisors LLC.
Franklin Building Supply in Boise, Idaho, ran out of a type of
lumber used in walls, flooring and roofs one day in February for
the first time in years. Rick Lierz, who runs the supplier, said
one shipment of wood he was waiting for was stuck on a railcar just
20 miles away.
His employees drove to local Home Depot Inc. stores to buy the
lumber needed to fill orders to local builders due that day. Home
Depot recently told investors that rising lumber sales and prices
contributed to higher earnings in the fourth quarter of 2017.
"The cardinal rule when you're a supplier is you don't run out
of what you need to supply," Mr. Lierz said. "It's like an ice
cream shop running out of chocolate."
--Bob Tita contributed to this article.
Write to Benjamin Parkin at Benjamin.Parkin@wsj.com
(END) Dow Jones Newswires
March 01, 2018 10:14 ET (15:14 GMT)
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