With Lumber in Short Supply, Record Costs Set to Juice Home Prices

A lumber shortage has pushed prices to record highs as builders stock up for what is expected to be one of the busiest construction seasons in years. Builders say the higher lumber costs are making homes more expensive. Lumber prices started rising last year after fires destroyed prime forests and a trade dispute between the U.S. and Canada restricted supplies. Now a shortage of railcars and trucks is forcing builders to pay even more. “We are in a lumber supply crisis,” said Stinson Dean, a broker in Kansas City, Mo., who ships wood from sawmills to lumber yards, in a note to clients. “None of us have experienced a market like this.” Marc Towne of Classic Homes, which builds midrange to high-end houses in Colorado Springs, Colo., said he is spending $8,500 more on lumber for a typical home than a year ago, an increase of almost 40%. The company’s passing on about half the cost to buyers for now while it waits to see if lumber prices fall. “We hate to give large increases all at once because it can freeze your market,” Mr. Towne said. High lumber costs added about $3,000 to the price of a home he purchased himself in Castle Rock, Colo., late last year. Prices are rising as lumber yards try to stock up ahead of what looks likely to be a busy building season this spring. A strong economy and tight supply of houses are heating up the home-building market. The number of new units under construction in the U.S. rose almost 10% in January, the Commerce Department said, as strong demand kept builders working through the winter. Permits for new homes, a sign of anticipated construction, also rose...MORE