Over the course of the past year, our economy has endured a wide variety of shortages. Cleaning supplies, PPE, food items and most famously toilet paper have all been hard to come by at certain points of the pandemic. Some of these are expected; of course a global pandemic would increase demand for cleaning and medical supplies. However, even as the country recovers from COVID-19 and its related economic shutdowns, some unforeseen consequences persist. A mix of supply chain issues and unexpected demand have driven lumber prices up by over 300 percent since April 2020.
If a lumber shortage wasn’t on your COVID-19 bingo card, you’re not alone. At the beginning of the pandemic, many lumber suppliers anticipated a slowdown in business as the economy shut down and the country entered a recession. Health restrictions and staffing issues in the lumber and transportation industries strained the supply chain. At the same time, assuming that home-building and renovations would drop significantly, many lumber wholesalers sold off their inventory and dialed down their production.
That anticipated drop in demand never happened. Interest rates across the board lowered at the onset of the pandemic, including 30-year fixed mortgages. This led to an increase in the demand for newly-built homes, the cost of which has increased by almost $36,000 compared to the same time last year. Adding to the demand spike were homeowners deciding to renovate their homes after months of being stuck inside.
The construction industry isn’t the only concerned party when it comes to lumber. Market-wide, the humble pallet has increased in price by nearly 400 percent in some cases, if the pallets are even available, which in many cases they are not. This has been a major concern for the food and beverage industry, especially fresh produce, which has stringent pallet requirements and a notable time limit on transportation. One farmer was told by a pallet company that they were no longer taking new business due to a difficulty in keeping up with the demand of current customers.
Industry experts and economists don’t have a clear picture of when lumber prices will recede to pre-pandemic levels, but prices have been decreasing for the past couple of weeks. The price increases have driven demand down for consumers who are more sensitive to price changes. However, industries that rely on lumber for their products are still taking a major hit from the price spike.
For DIYers looking for a more affordable option, recycled pallet boards may save some money on materials for certain projects. Since the pallet has reached the end of its lifecycle at this point, it can’t be used for transportation. However, many creative home carpenters have created stunning pieces with nothing but pallet wood.
We will monitor the current lumber shortage and price increases as we learn more. Stay tuned for future updates.