Crews at a construction site in Denver, Colorado, are working around the clock, trying to keep up with an increased demand by building more housing.
“It’s getting really interesting out there isn’t it,” said Stephen Myers CEO at Thrive Home Builders.
Myers says though the real estate market is booming across the country, an increased cost of lumber is cutting into builders’ profits.
“The increase is $5,000 to 12,000 per house,” he said of his current project. “And we’re concerned about the ultimate price impact for our buyers.”
According to the National Association of Home Builders, the price of lumber has increased by 173% since mid-April to an all-time high in August.
“Without a doubt, the housing prices will go up because lumber is a very important input of houses,” said Kishore Kulkarni, Ph.D. a professor of economics at MSU Denver.
Kulkarni says there’s multiple reasons why lumber prices have skyrocketed during the last few months, including higher transportation costs, some lumber mills shutting down, low interest rates and more people looking to purchase homes during the pandemic.
“The supply of lumber is having a lot of bottlenecks because of COVID-19,” he said,
This is pushing up the price of a typical new home by more than $16,000, according to the National Association of Home Builders.
Back on the job site, Myers’ team is pulling out the blueprints and looking for ways to offset higher lumber prices.
“Hopefully the lumber supply can rise to the occasion to meet the increased demand,” Myers said.
While crews continue to frame new houses, experts predict the cost of lumber won’t level.
So, for now, prices will continue going through the roof.