The pandemic-induced lumber shortage has driven up the price of the building material. According to the National Association of Home Builders, the spike has caused the average price of a new single-family home to increase by more than $24,000 since this time last year.
When we were reading we ran into the question “Why is the cost of plywood so high?”.
Lumber and plywood prices are so high now because of the short-run dynamics of demand and supply. Wood demand shot up in the summer of pandemic. Many homeowners were stuck at home, unable to vacation.
Then, why has the cost of plywood gone up so much?
A home improvement or building project that involves scrap iron or steel will set you back more now than it did in early 2020.
What is the average price of plywood?
The price of plywood varies significantly depending on the size and thickness. A 4X8 sheet can range from $7 to as much as $60. As an example, for a 1/4 inches thick board, you may pay $8, while an 11/32 inches thick panel will cost around $18. You can get a better idea through our chart below.
Will plywood prices drop soon?
“Looking ahead, hope abounds that construction starts will soon begin a more robust rebound forecast in the first quarter. Plywood prices will rise 39.8% this year, says IHS Markit.
You could be asking “When will plywood prices drop?”
Plywood and lumber prices overall experienced an extreme spike in the early part of 2021, peaking in early May and dropping quickly to levels approaching but not yet matching pre-pandemic prices in July.
Why is the price of lumber so high?
Wood is fairly abundant, in North America, especially in the southern forests. Modern mills are very efficient at turning logs into 2x4s and sheets of plywood. Lumber and plywood prices are so high now because of the short-run dynamics of demand and supply. Wood demand shot up in the summer of pandemic.
There are three primary reasons why lumber prices were much higher than normal. There are fewer lumber mills. The first reason has developed over many years: a consolidation in the number of sawmills to refine the raw product. In fact, employment at sawmills is down 30% from 20 years ago. Sawmills are capital intensive endeavors.
When is the price of lumber expected to drop?
Since the last time we touched on the subject in early September of 2020, the cost of lumber has already started to decrease substantially. It has dropped from $948 per thousand board feet in September to now $565 per thousand board feet in early November.