Who’d build (and buy) a house in today’s environment? That is the question posed by the National Association of Home Builders (NAHB), which reports that builder confidence for newly built single-family homes fell to just 39%—crashing 3% over the last 30 days – not helped by the swelling price of lumber (now up 14.9% on 12-month averages), which is having a trickle-down impact on the fixtures and fittings of a new home.
According to the Wells Fargo Housing Market Index (HMI) – which surveyed more than 2,000 NAHB builders across America – uncertainty around Trump’s tariffs on lumber, drywall, steel, and aluminium has already seen the builders add US $9,200 to the material cost of a house – at a time when 29% of builders drop house prices and more than 59% use sales incentives to move stagnant stock.
“Regional HMI data showed declines (in buyer traffic) across all major regions. The Northeast fell three points to 54%, the Midwest dropped three points to 42%, the South decreased four points to 42%, and the West declined two points to 37%.”
The National Association of Home Builders / Wells Fargo Housing Market Index (HMI) reports that buyer traffic is now at a 15-month low, crunching house builders already dealing with spiralling material costs.
And amid swelling uncertainty around tariffs and duties, the NAHB warns that lumber prices now stand at their highest levels since June 2023 – fuelled by surges in Western spruce-pine-fire 2×10 (up 63.2% over the past 12 months) and Green Douglas fire 2×10 (also up 53.6%).
Why a 3.1 billion feet drop in lumber capacity matters for housing prices
Then, there are major sawmill closures, with Fastmarkets estimating that last year’s sawmill curtailments have already reduced North America’s softwood lumber capacity by more than 3.1 billion board feet. To make up for the shortfall, the NAHB is lobbying White House officials to cut tariffs and duties on Canadian lumber, boost local production (logging in federal forests), cut exports of hardwoods and softwoods to China and identify new markets for imports.
“In addition to the narrowly defined framing lumber, products such as plywood, OSB, particleboard, fibreboard, shakes, and shingles make up a considerable portion of the total material cost of a new home,” according to the NAHB’s latest report on Framing Lumber prices. “Surveys conducted by Home Innovation Research Labs show that the average single-family home uses 2,200 square feet of softwood plywood and 6,800 square feet of OSB, in addition to roughly 15,000 board feet of framing lumber.“
Then, there are inputs into cabinets, windows, doors, and trusses: “To account for the manufacturer’s margins, sawmill prices for the lumber embodied in these products are marked up by the percentage difference between receipts and cost of goods in the “wood product manufacturing” industry,” the NAHB said.
“The bottom line is that changes in softwood lumber directly impact the price of a new home. This, along with the rising wages for construction workers and higher interest rates, is one of the reasons why the housing market is experiencing declining affordability.”
The National Association of Home Builders Framing Lumber Prices Report, published yesterday, on the importance of softwood lumber pricing on the cost of housing across the United States.
- To read more about the impact of building materials on the cost of a new home, click here for Wood Central’s special feature from last month.
