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Lumber supplies lag as housing market gains momentum

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A combination of increased demand and limited inventory is driving up prices. Sound familiar? Well, we’re not writing about the housing market this time.

In case you haven’t noticed, lumber supplies are having difficulty keeping pace with the marketplace, which in turn is driving up prices. According to BuilderOnline.com, the Random Length Lumber Price Index has increased by more than 60% from late 2011 to March 2013.

The housing crash is at least partially to blame for the lumber supply logjam (“With the severe declines in housing over the past years, many building material manufacturers cut back production dramatically,” said NAHB chief economist David Crowe in February), as well as tight credit restrictions, which have made it difficult for producers to reopen plants.

But several factors are coming into play, including “permanent supply reductions—the loss of exports from Russia, the devastation of forests in the Northwest by mountain pine beetles, and harvest reductions ordered by the governments of Quebec and Ontario—ownership of more timberlands by investment organizations that are more focused on maximizing profits than on supplying mills; and increasing global demand for lumber in China, India, and other countries.”

One expert tells BuilderOnline.com the lumber shortage could be observed for at least five years.

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