The NAHB has tracked the relationship between softwood lumber price volatility and the average price of a new single-family home and a new multifamily home at several points during the pandemic. While prices have settled from their highs in the spring of 2021, when softwood lumber prices added approximately $36,000 to the price of an average new single-family home, softwood lumber prices are still contributing to price appreciation in both the single-family and multifamily sectors, according to the NAHB.
On balance over the entire period, softwood lumber prices have increased enough to add $14,345 to the price of an average new single-family home, and $5,511 to the market value of an average new multifamily home, according to NAHB’s latest estimates. The increase in multifamily value, in turn, translates to households paying $51 a month more to rent the new apartment.
At the prices reported by Random Lengths on April 17, 2020, the total cost to a builder for softwood lumber was $16,927 for the products in an average single-family home, and $5,940 for the products in an average multifamily home.
More recently, based on Random Lengths prices reported on July 1, 2022, the costs have risen to $29,407 for the softwood lumber products in an average single-family, and $10,734 for the products in an average multifamily home. These numbers represent a 74% ($12,480) and 81% ($4,795) increase in single-family and multifamily builders’ softwood lumber costs, respectively.
Prices to home buyers go up somewhat more than this, due to factors such as interest on construction loans, brokers’ fees, and margins required to attract capital and get construction loans underwritten. As explained in NAHB’s recent study on regulatory costs, for items used during the construction process, the final home price will increase by 14.94% above the builder’s cost.
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