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Justin Reginato, Ph.D.
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Framing Lumber Prices are Skyrocketing

6/22/2018

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I just posted about increased architectural building serving as a positive economic indicator for growth in the construction industry so I'll balance that news with a dose of bad news. The price of lumber is absolutely wildin. See for yourself in the figure below created by Bill McBride at the Calculated Risk blog:
Picture
Prices have been essentially climbing since the middle of 2015 and then accelerated in the fall and winter of 2017 with the devastating wildfires in northern and southern California with the market knowing that thousands of homes would need to be rebuilt. The steepest growth comes in January 2018 as lumber tariffs on Canadian lumber were imposed (if you are looking to troll, this is not a political statement; it comes from the National Association of Homebuilders).
Anecdotally, I am hearing project owners bemoaning the increased cost in lumber and steel (also subject to tariffs) to the point many are contemplating shelving projects that haven't broke ground and busted financial models for those that have. It will be interesting to see how these developments affect forward-looking economic indicators like the AIA ABI going forward.
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