Up, Down, Boom, Bust, What’s Next With Lumber Prices?

construction lumber prices

When the price of lumber rose 300%, many of us wondered if that would be another new normal: pandemics and exorbitant lumber prices. It took Fortune eight charts to explain the skyrocketing lumber prices that recently fell to earth.

Lumber prices peaked at $1,515 per thousand board feet, then plummeted to $399 and rose to $630 in September 2021. You can see why there might be some confusion.

Riding the Wood Roller Coaster

By March 2021, monthly housing starts were at 1.7 million…all that building caused demand for framing lumber, OSB (oriented strand board), and plywood to soar. Lance Lambert, Realtor.com data journalist

Roller coaster enthusiasts say wooden roller coasters are a rough ride but always worth it. The lumber prices roller coaster ride has been equally rough.

Spring 2021 saw lowered interest rates and another housing market run. Available suburban houses were grabbed up by eager homebuyers that no longer had to commute to the city for work. The housing shortage led to an almost frenzied demand for new homes. And lumber.

With another pandemic looming, homeowners went on a home improvement spree. They began DIY (do-it-yourself) projects that required construction materials, like wood.

At the same time, and equally surprising, we were walloped with a severe worker shortage. Sawmills and lumberyards struggled to fill increased orders with a reduced workforce.

Managing Construction Projects: Be More Proactive

Something good may yet come from riding the wood roller coaster this year.

Granger Hassmann of Adolfson & Peterson Construction says uncertainties can force us to become more proactive. You can’t prepare for delays on the manufacturing side, so “considering different materials, systems, or manufacturers is crucial.”

It doesn’t matter what’s next with lumber prices if you’re proactively investigating materials options. Rather than waiting for anything, “You have to be more proactive,” said Hassman. A procurement cycle might have been 6-12 weeks. “Now it’s maybe a week. It’s just all about speed and management.”

If you’d like to be more proactive with business development, call 800-925-6085 or contact Construction Monitor. We customize data analytics to increase business – your business.

Dealing With Rising Construction Materials Costs

construction  materials costs

Overall costs are lower than they’ve been since 2010 for the construction industry. But construction materials costs are rising. In August 2020, we saw the largest increase in lumber prices since 1949. Some of the rising costs can be attributed to:

  • Construction demand is greater than mills’ current production capabilities.
  • DIY (do-it-yourself) renovation projects increased among at-home homeowners.
  • Mills closed due to pandemic; those that remained open saw a dramatic demand reduction.

5 Strategies for Managing Construction Materials Cost

With no end in sight to the pandemic and international tensions running hot, construction materials costs will continue to rise for the foreseeable future. Anirban Basu, Associated Builders and Contractors

You can’t control higher construction materials costs but you can better-manage construction project materials:

1. Bulk shipments – Large orders for materials needed at different phases of the project lead to:

  • Potential damage from moving materials repeatedly
  • Shuffling materials around
  • Time lost trying to find where materials are stored
  • Unplanned deliveries

Ask your distributor(s) to work with you to break down deliveries according to contractors’ needs.

2. Inventory – The number of hours we lose locating and retrieving materials is amazing. We also tend to over-order because running out of something presents more challenges than having too much of anything. Every day, crews lose time making lists of needed materials and stopping work to retrieve ordered materials. This is a key project planning area construction management teams can improve upon.

3. Pre-work kits – Encourage distributors and contractors to package materials in customized kits for faster delivery and onsite installation. This also reduces waste.

4. Update cost estimates/plans regularly – Changes in construction materials costs need to be factored into the project as soon as possible.

5. Use construction management software – When a contractor needs additional materials, shared software alerts workers of the possible change in project scope. It can eliminate miscommunication.

Construction materials costs are leading to newer – better – construction industry materials. And technology is driving development. Construction Monitor has been a leading provider of analytics for the construction industry since 1989. Ask us how we can customize data to make it work for you.