Lumber prices surged to a new high of $1,357 per thousand board feet following Russia’s invasion of Ukraine, but in recent weeks, that number has fallen by more than 20% to near $1,000, Fortune reports. Nonetheless, lumber prices are still up by more than 135% since the start of the pandemic in 2020, causing the price of a new single-family home to rise by over $18,000.
As industry suppliers confront inflated gas prices pushing up shipping costs, more volatility could be on the way, but some home builders are instead predicting relief from elevated prices in the near future.
The second-largest homebuilder in America, Lennar, revealed in a March 17 earnings call that rising lumber prices have accounted for roughly 60% of their year-over-year cost increases.
The company didn’t have great news for homebuyers despite lumber’s dramatic 20% fall. “Further increases are anticipated as lumber futures indicate short-term inflation through the spring cycle or into early summer,” CEO Jon Jaffe said.
Based on Lennar’s analysis and on feedback from major lumber industry participants, he said the company believes lumber price “deflation” will eventually follow.