How Rising Lumber Prices Impact More Than Just Home Builders

As lumber prices continue to soar, the cost is to build homes is rising with it and pricing many prospective home owners out of the market. The average price of a single-family home has risen more than $24,000, and many clients are having to walk away because they can’t afford the increase. This fast price escalation is having far-reaching consequences throughout the industry, and prohibiting home builders and partner organizations from providing much-needed housing to families across the country.

“Our tri-county service area has experienced a 55% decrease in home construction over the past two decades, despite our population growing by 5% each year,” observed Morgan Pfaff, executive director of Habitat for Humanity of Wisconsin River Area. “House prices have also grown 24% faster than wages in that same time frame, creating a serious housing shortage that most deeply impacts lower-income working families, but also harms local industry due to a growing inability to attract and retain a skilled workforce.”

“The rising price of lumber and scarcity of building materials has had a significant impact on our ability to address the housing crisis,” she added. “A home that was built in 2018 cost $11,300 to raise the walls; those same walls cost $17,074 two years later. This is a 66% increase, and will only further restrict our ability to provide safe, decent and affordable housing in our communities.”

Many Habitat for Humanity chapters are experiencing similar setbacks, not only in constructing homes, but providing critical repairs for the families who own these homes.

“Our Habitat affiliate is the only agency completing major repairs — roofs, furnace and septic system replacements — and installing wheelchair ramps in our service area,” shared Nancy Pellegrini, executive director of Habitat for Humanity Menominee River in Michigan. “We serve families that are at or below 60% area median income. Since the price increase of lumber, we have not been able to complete as many critical repairs as usual. We have also had numerous customers decline repairs due to the cost of materials.”

As nonprofits, Habitat for Humanity affiliates are doing their best to help bridge the gap through fundraising and additional financing.

“Luckily, we were able to access additional financing and a very generous gift in kind or we may have had to forego another year of home construction because of rising lumber prices, having already lost a year due to COVID shutdowns,” noted Virginia Ohler, executive director of West Tuality Habitat for Humanity in Oregon.

This is not a sustainable solution in the long run, however.

“Having to pay an additional $10,000 to $15,000 for material would price the families we are serving out of the market,” stated David Schreiber, construction manager for Stephens County Habitat for Humanity in Georgia. “The only solution is to raise additional money and gift the family anything over what they can afford, which is not a good solution because fundraising is difficult enough without having to explain some dollars would be gifted. We need donated material or subsidized material to continue our mission.”

Other Organizations Also Feel the Impact

“The price increases for lumber products are a main contributor to increasing the costs to build a home,” noted David Frandsen, owner-builder program manager for Utah-based Neighborhood Housing Solutions, a nonprofit organization that focuses on helping local individuals and families find a pathway to affordable housing. “There are people that we can no longer help to get into a home because the costs of materials (especially lumber) continue to increase at unsustainable rates.”

Workforce development programs also are struggling.

“We have a limited budget to purchase on our student projects,” shared Michael Schaffer, a building construction teacher in Illinois. “The high cost of lumber is limiting the projects and training that students need in order to become successful within the high-demand construction industry. We are completely over our school budget for our highly skilled building construction courses.”

Workforce development has been one of the biggest opportunities to combat housing affordability, even before the COVID-19 pandemic, as the industry struggles to bridge a gap in labor shortage. Impeding training for much-needed workers because of lack of supplies could have long-term impacts.