What the Data Says: Falling Lumber Cost Trends and Dramatic Price Fluctuations

The trendline for framing lumber costs resembles the layout of a truly nausea-inducing rollercoaster, with more dives and climbs in store for 2023. And for businesses affected by these volatile cost changes, it feels like a never-ending wild ride. After a harsh climb mid-2022, costs dove into the new year following a downward trend but without approaching pre-pandemic numbers, according to the national average.

When we looked at wood costs in 2018, our analysis showed a lumber cost trend as steady and reliable as the material itself. From 2014 through 2018, design professionals and contractors enjoyed relative price stability. But our analysis in 2021 told a very different story. Here is a timeline to help catch everyone up to the saga of wood costs:

• 2020: COVID-19 hits America. Many companies in the lumber industry slow or stop production due to lockdowns, health concerns and economic caution. The early confines of the pandemic create a shift in consumer spending, as people embrace DIY home improvement projects. Simultaneously, the housing market starts to heat up due to low interest rates and remote job opportunities.
• 2021: The increased demand and low supply raises the price of lumber. Supply chain issues and labor shortages exacerbate the price surge, with costs skyrocketing more than 200% above pre-pandemic levels.
• 2022: Steep interest rate increases cool the housing market. As pandemic restrictions loosen on travel and businesses across the country, companies start reopening offices and consumers budget less on home improvements and more towards dining out and entertainment.

Framing lumber costs have fallen 42% since early 2022. So we enter the new year with lower lumber costs, but if we’ve learned anything from this trendline, it’s that we can’t get too comfortable.

Decreases Across the Board: Other Wood Material Costs

Framing lumber is not the only wood cost our data experts are closely tracking. Plywood costs have also climbed following the onset of the pandemic and have since fallen. Since mid-2021, at the time when plywood was at its highest rate according to the nationwide average, plywood costs have dropped 55% and continue to follow a downward trend.

Pine boards, another wood material, is only slightly beginning to decrease. After a 225% climb over the past two years, pine boards took a downward turn toward the end of 2022 and dropped 10% this past quarter.

Keeping track of these volatile lumber cost trends can be tricky, especially when planning construction projects.

Gordian regularly collects, validates and analyzes North American construction material, labor and equipment costs to enable our customers to create reliable project budgets, build estimates and validate price proposals. Thanks to the 30,000+ hours of research we devote to construction costs every year, we can examine the price of wood and tens of thousands of other line items from every corner of the U.S. and Canada.

The Effects of Fluctuating Lumber Costs

A wide range of engineers, architects, estimators, contractors and facility owners depend on accurate construction cost data to plan new building construction and renovation projects. Looking at the unsteady lumber costs trend line, these professionals should be on guard for more price fluctuation in 2023. The industries most affected by lumber prices are residential construction, the mortgage industry, sawmills, freight and transportation, and home improvement retailers.

Anyone planning and estimating construction for 2023 will want to keep a close eye on costs. Gordian’s RSMeans Data Online provides cloud-based access to the industry’s leading construction cost database and advanced features like square foot costs and predictive cost data to help you budget and estimate accurately. Automatic quarterly updates ensure you always have access to the most current data available for construction estimating.

Volatility in lumber price hikes stunned the market in recent years, and while impacted businesses and industries are experiencing some relief from cost decreases lately, it’s clear that these material costs are prone to quick shifts. The unstable price changes we have seen in recent quarters will have an impact on the cost of construction for the foreseeable future. We’ll continue to track these changes and more to keep you informed on what the data says.