During the pandemic, many people worked from home, had income and were motivated to do home improvements while sawmills reduced workforces and production. The imbalance of supply and demand led to historic price volatility.
Lumber prices before 2019 hovered around $400 per 1,000 board feet (explained below). Prices hit a record high of $1,500 in April of 2021. They plunged to $483 by July 2021, shot back up to $1,337 in February 2022, dropped again to $874 in April and is back up to $920 as of May 13, 2022. Lumber instability ultimately contributed to the current inflation.
Types of wood
There are three types of wood: softwood, hardwood and engineered wood. There are many varieties of trees and each species has different qualities. Each tree creates multiple grades of wood depending on where and how the lumber is milled (cut).
The determination of “softwood” or “hardwood” comes from the tree’s seed rather than the wood itself. If the seed is exposed when it falls to the ground – like a pinecone – it is softwood. If the seed is covered – by a shell or fruit – it is hardwood.
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Softwood trees include pine, cedar, redwood, fir and spruce. Spruce, pine and fir (SPF) are used for framing new construction. Many of these resist rot and insects and are well suited for exterior construction such as fences, decks or outdoor furniture.
Hardwoods come from deciduous trees that most often lose their broad leaves each autumn. Most hardwood trees grow slowly and mature in about 100 years. Hardwood trees are valued for their grain, color, cut smoothness, and hardness to resist minor damage. The time and space required to grow hardwood trees creates higher-priced lumber.
Hardwood trees include walnut, oak, maple, cherry, mahogany and more. Hardwoods are well suited for furniture, cabinet fronts, interior finishes, flatware, toys and more.
Bamboo is technically grass but is often classified as hardwood and most often included with engineered wood.
Engineered wood doesn’t occur naturally. It is often manufactured from the waste wood at sawmills. Engineered wood is often a composite that is processed with chemicals or heat to produce a product with qualities or in sizes that would be unlikely to occur in nature. It is most often sold in broad, flat sheets and is unlikely to warp or cup.
Engineered wood includes plywood, oriented strand board (OSB), fiber board, composite board and hard board, which is used for pegboards. Plywood is layered and glued in alternating directions for strength and warp reduction.
Most engineered wood is used in unseen construction locations to add strength. It is often painted, laminated or covered with a veneer to disguise its actual appearance. It’s often the least expensive option.
Wood veneers are often classified as engineered wood since pieces (mostly hardwoods) are cut and joined to other wood or wood composite products to achieve specific wood grain appearance or size requirements. Many modern “hardwood” floors are actually engineered wood with a hardwood veneer.
Lumber is measured and wholesaled in 1,000 board feet. This is calculated as length X width X thickness ÷ 144 (a square foot). So, an 8’ by 4’ by .5” sheet of plywood would be 16 board feet. Wood is either domestic (grown locally) or “exotic” (grown elsewhere). Woods are considered for their color, grain, density, strength (failure point), stiffness (bend under a load) and ability to take stain or paint. Some woods are selected specifically for their heat, moisture or electrical current tolerance.
Others may be selected to make storage containers (casks or barrels), eating or serving utensils and will be judged on odor, taste and lack of allergens. Construction grade wood is often unseen behind walls and is likely to have knots and other imperfections. Low grades become pallets or engineered wood.
When purchasing lumber for home projects, look for dry, straight wood with few knots or other issues. Get KD (kiln dried) and HT (heat treated) wood to kill pests and remove moisture.
Lumber futures are likely to remain volatile for a while. Immediate issues affecting prices are shortages in labor, equipment and parts. Additionally, lumber is heavy and must move a lot. From forest to mill to wholesaler to end user requires several trucks, probably a train and possibly a ship. All of these require trained professionals, specialized equipment, and fuel. These are in short supply and affected by economic volatility.
Inflation and mortgage rate increases should drop lumber prices because high prices should reduce demand. However, we have a housing shortage, Canadian tariffs and a European war. Ultimately, housing drives lumber costs, and housing is still hot.
This information and all previous monthly Information Of Value (IOV) posts are assembled into a convenient, no-cost book. All future IOV updates will be added to the book. You can view, bookmark, download or share it with friends from my Google Drive: LINK.
Mark M Hancock, GRI, MRP, AHWD
REALTOR, New Build certified
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