How Lumber Prices Impact Home Construction

This also causes a breakdown in the supply chain. When we have a breakdown in the supply chain we often run into higher costs. Supply chains continue a normal exchange of so many products for so much rate. This rate is lower than the open market as it creates the chain and a pretty steady flow of money and product. When this piece of the chain breaks, we then have issues selling or purchasing the product. The open market is often not kind, and companies will pay premium prices.

It’s also suggested that personal DIY demand had a part to play in the need for lumber. Home improvement stores like Lowes or Home Depot struggled with how many people were starting or taking the time to finish projects around their homes as covid kept everyone inside. Now that the lasting effects of covid have worn down and people have returned to normal day-to-day life, there has been a decrease in the personal need for wood. People spending more time out with other entertainment has helped with high demand and relaxed the tight prices.

Thankfully the lumber prices are starting to go back down, but this is rubbing against the issue of interest rates. Regardless of the lumber prices, someone has to pay for the projects, and with an exceptionally high-interest rate, it can be difficult to get the same house that you could have with lower rates. Construction companies themselves need their loans to purchase things and pay workers, and of course, consumers need the loans to pay their contractors. The relationship between banks and the consumer now has some friction in yet another way.