Average lumber prices have surged 80% since mid-April 2020, moving from a low of $348 per thousand board feet to $627 per thousand board feet as of July 31. According to NAHB chief economist Robert Dietz, this meteoric rise in lumber prices will add “thousands” to the cost of a newly built home, constrain new housing supply, and reduce affordability for new home buyers.
At the same time, single-family home demand has risen fast amid the pandemic, with new single-family home sales rising 14% in June to an annualized pace of 776,000 per year. New-home sales are up 3% in the first half of 2020, compared with the first half of 2019, while sales-adjusted inventory sits at only a 4.7-month supply.
As a result of the gains for housing demand and a slowing in the rate of improvement for the overall economy, the housing share of GDP rose to a 13-year high in the second quarter of 16.2%. As estimated by NAHB, that share has increased due to GDP declines outside of housing and relatively smaller impacts for residential construction operations.
