Lumber prices up 300% since last April — what that means for NJ consumers
The more expensive it is to build, the more expensive it's going to be to live in it.
The price of lumber remains wildly high compared to pre-pandemic days, and professionals in the construction industry have no idea whether prices will ever come down to where they were before supply and demand went awry in response to the COVID-19 health crisis.
"The price of a house has really increased $35,000 to $40,000 per home," Frank Belgiovine, president of Belmont Construction in Maywood, told New Jersey 101.5. "At the end of the day, it really boils down to the fact that housing will become unavailable and some builders would actually stop building because the jobs just won't pencil out."
Between April 2020 and May 2021, according to the National Association of Home Builders, lumber prices rose more than 300%.
Mills were forced to shut down or limit production at the beginning of the pandemic last year, and supply hasn't been able to catch up with greater demand — not only have many potential homebuyers been opting for construction in the current housing boom, but more folks have been purchasing lumber for their own projects at home.
Belgiovine pointed to tariffs on lumber as another reason for higher prices these days. Tariffs on lumber and steel were imposed under Donald Trump's administration.
"The rapid price increases and supply issues related to lumber as well as many other building materials have added a level of uncertainty for New Jersey homebuilders and consumers," said Jeff Kolakowski, CEO of the New Jersey Builders Association. "These unprecedented circumstances are certainly having a negative impact on construction activity and are only adding to New Jersey’s housing affordability problems."
The price of building a multifamily home has risen $13,000 since April 2020. Following industry trends, rent for one of the new apartments would rise accordingly.
Belgiovine said folks in the industry are in wait-and-see mode with pricing. They're hoping the higher cost is temporary, but it's hard to tell how this will play out.
"Will it go back down to where it was in April 2020? We believe that it won't," he said.