Historically low interest rates driving demand in the US housing market but astronomically high lumber costs are causing trouble on the supply side.
No sign of significantly higher mortgage interest rates from the Feds but last week many were pressuring the Biden Administration to remove the 9% tariff on Canadian lumber set up by the Trump Administration.
Instead of reducing or removing the tariff coming out of recent meeting with Canadian officials, the U.S. Commerce Department is working to double the tariff rate to over 18% which understandably is causing concern from Canada and appreciation from US lumber mills.
"A failure to act decisively will show that the White House has lost all credibility in its claims of fighting for housing affordability and the interests of working-class families." - Chuck Fowke, chairman of the National Association of Home Builders (NAHB)
Those in the lumber mill industry have different opinions:
“The increase is unlikely to result in higher lumber prices because they’ve more than doubled in the past year to all-time record highs. Prices are supply-and-demand driven, Tariffs drive the cost up for producers but it’s not going to affect prices.” - US lumber expert Kevin Mason.
Home prices are increasing across the country but at some point more and more house starts are going to be put on hold, single family and apartment construction at a time when some cities such as Austin are in desperate need of additional housing.
400% increase in lumber costs are hard to pencil out, especially when a wooden pencil also costs 400% more!
Link below to great article outlining the urgency needed for addressing sky high lumber costs:
https://www.prnewswire.com/news-releases/move-to-double-lumber-tariffs-shows-white-house-does-not-care-about-housing-affordability-301297270.html