For builders and buyers of new, single-family homes alike, the past 24 months have been unpredictable. Lumber prices particularly have surged and fallen repeatedly, making long-term construction projects that much more challenging to estimate.
So where do we stand now?
In this post, we’ll give you a quick overview of the lumber prices and outline a credible strategy for insulating your construction projects from unnecessary uncertainty.
What’s Going On With Lumber Prices Now?
There’s no point of us quoting you a $/board foot cost now — by the time you read this, it could be vastly different.
But consider this: between 1947 and 2019, the lumber prices fluctuated by about 0.3% from month to month. Since January 2020, however, this monthly fluctuation has averaged roughly 12%. After surpassing $1,650 per 1,000 board feet in the spring of 2021, the prices plummeted back to the ~$500 range and surged again past the $1,300 just in time for the holidays.
source: tradingeconomics.com
Why Are the Lumber Prices So Volatile Now?
The most recent volatility started in January 2020, with the global spread of the COVID-19 virus. In the pandemic’s early days, the double effect of soaring demand for home renovations and lumber mills operating at a reduced capacity caused lumber prices to go up.
And now, continued increased demand and overall supply chain issues are continuing to add instability to wood prices.
Will Lumber Prices Stabilize in the Future?
Who knows? For now, lumber prices are off on a bit of rollercoaster ride, and there’s little anyone can do to predict which way they will go in the future. Given the current supply chain issues and , market volatility, significant lumber price fluctuations seem to have no end in sight.
How Can I Protect My Project From Volatile Materials Prices?
In recent months, most construction materials have seen some price increases. As we’ve said before, the supply chain crisis and higher shipping costs haven’t spared anyone. So, regardless of what you’re using to build, you’ll pay more for it — for the foreseeable future, anyway.
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That said, estimating your construction project shouldn’t feel like playing the lottery. And if you build with lumber these days, that’s sort of what you’re doing — trying to pinpoint an elusive figure that may or may not materialize when you start to build.
The only way to reduce your exposure to this risk and cut through a large chunk of the uncertainty is to avoid building with lumber.
Insulated concrete forms (ICFs) and concrete is a natural alternative. Granted, the foam in ICFs has seen upward price pressure recently, as has concrete. Unlike lumber’s, however, these prices haven’t fluctuated so wildly. This means that you can more confidently plan your project’s budget without losing sleep for the next year or so or overcharging your buyers just to cover the risk.
But homes built with concrete and ICF aren’t just resilient in volatile markets. ICF and concrete homes are far more energy-efficient, resistive to natural disasters, and comfortable — all features you can easily use to charge your buyers a reasonable premium.
There are also some benefits for you, the builder — you can read about them here.
Wrapping It Up
If you want to feel more confident that your estimates will still be valid when the shovels hit the dirt, concrete is a great alternative to explore. If you want to gain an edge over your competition and avoid stuffing your construction budget with fat allowances and contingencies, again, concrete is something to consider.
And don’t forget: when you build with concrete and associated systems, like ICFs, you’re giving your buyers a more energy-efficient, disaster-resilient, and comfortable product.
