A lot of important resources became scarce because of the pandemic and supply chain issues. The lumber industry was hit hard, which made it difficult for everyone from major developers to homeowners to find the supplies they needed. It also meant that lumber prices increased exponentially since the start of the pandemic. Now that life is returning to some sense of normalcy, the big question is how will the lumber industry be affected.
During the first 12 months of the pandemic, lumber products, such as plywood basically quadrupled in price. For consumers, that meant that a piece of plywood that once cost $12.80 was now being retailed for $48.00. Ultimately, this price hike all came down to the classic relationship between supply and demand. With workers forced to stay home, the lumber industry simply wasn’t able to meet demand, which drove up prices and created a lumber bubble.
Fortunately, experts believe that the bubble has finally burst and prices will continue to decline.
In the past year-to-date, lumber prices have dropped by 50%. Prices peaked at the beginning of 2022, and have been on a steady decline ever since.
Why are Lumber Prices Dropping?
While there are a lot of variables involved, there are two main reasons for the drop in lumber prices.
- The U.S. government has taken steps to curb inflation, which has reoriented the markets, especially when it comes to housing.
- The U.S. also imposed tariffs on lumber that was being imported from Canada at lower prices, which has also repositioned the supply and dynamic in favor of the consumer.
Over the past two-and-a-half years, the lumber industry has seen dramatic fluctuations. In the coming months, there may be some rise and fall in prices, but the downward is expected to continue. This is good news for anyone who has been putting off building a house or investing in a home improvement project. While the trickle-down effect of major changes at the top of the market is still reaching retailers, the future looks bright for consumers who were paying top-dollar for lumber.
If you are ready to tackle your next home improvement project, contact the experts at Gerald Jones Company.