Lumber price growth continues amid US–Canada trade deal uncertainty

Dive Brief:

  • Softwood lumber prices rose 2.3% in March, the second-straight month of increases following a 4.8% uptick in February, the National Association of Home Builders reported. Prices have climbed 12.9% since March 2016.

  • Some softwood lumber products have seen year-over-year price hikes of more than 25%, increases the NAHB attributes to uncertainty over the U.S.Canada trade agreement following its expiration in October 2015 and the end of the grace period in October 2016.

  • Elsewhere in the materials market, prices for OSB are at their highest point since June 2013, rising 2.7% in March and 25% from a year ago. Gypsum and ready-mix concrete prices also increased in March, but at a far-less-concerning rate of 0.2% and 0.3%, respectively. 

Dive Insight:

Overall, construction material prices have increased for the past four months, including a 0.3% rise from February to March and a year-over-year increase of 4.4%, according to an analysis of the Bureau of Labor Statistics’ latest Producer Price Index by the Associated Builders and Contractors.

The rising cost of building material prices continues to challenge homebuilders' outlook on the market, with the latest NAHB/Wells Fargo Housing Market Index falling three points in April, albeit remaining in positive territory.

Attracting considerable attention in recent months has been the ongoing uncertainty as to the fate of Canadian softwood lumber import tariffs. A new agreement has yet to be reached, which is raising concerns about pricing volatility, apprehensions that seem to be coming to fruition.

Some clarity may come next week, as the International Trade Commission is expected to announce its ruling on countervailing duties for Canadian softwood imports on April 25, CBC reported. Paul Quinn of Canada-based investment bank RBC Capital Markets is predicting dramatic tariffs of 30% to 40%, according to the CBC. A decision on anti-dumping duties is expected in early May.

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Filed Under: Residential Building Economy Products
Top image credit: Wikimedia; Jaksmata