Where are Lumber Prices Now? The Impact on the Prefabricated Building Industry

By Ashley Simpson for Stillwater Building Systems



Lumber prices have been on the rise, but now they seem to be dropping off. What does this mean for prefab builders and developers?


It looks like the skyrocketing lumber prices from the past year might finally be on the decline. After climbing steadily over the past year, prices shot to record highs at the beginning of May — clocking in at nearly $1700 for 1000 feet of wood.


But in June, the price of lumber started dropping sharply. Now, it’s hovering just below $800 for 1000 feet. While that’s not quite at pre-pandemic levels, it’s still a sharp decrease from the prices we’ve been seeing. But what does this mean for builders and developers?


You Might See a Delay, and Here’s Why

Even though lumber prices are dropping overall, builders aren’t necessarily seeing the impact right away. Weeks of delay is to be expected, according to the National Association of Home Builders (NAHB) — mostly because suppliers are still trying to sell their lumber for the price they bought it.


There are a few other factors at play here as well. When lumber prices start dropping, suppliers are hesitant to buy lumber in large quantities. They keep less inventory on hand to avoid taking a large loss. Limited supply keeps these prices locked in at higher rates.


You might be wondering why it takes so long for falling prices to catch up with you when you see the impact of rising prices right away. The answer to this is that distributors are incentivized to buy low and sell high. When the market goes up, their prices also go up. This makes lumber more expensive for retailers, and so the price of the lumber you buy goes up in tandem.



When Can We Expect to See Lower Prices?

There’s not a concrete timeline here, but we expect to see lower prices once the lumber price drop has been stable for several weeks. Your relationship with vendors and building associations may also impact how quickly you see a price reduction. Builders who have long relationships with particular vendors often get relief sooner.


What Does That Mean for Your Project?

Lumber prices are lowering, but it might be some time before builders and developers see the impact. Because of this, many builders are looking for alternative ways to cut costs. According to the NAHB, one of the best ways to offset volatile lumber prices is with prefab construction.


The speed and efficiency of prefabricated processes allow builders to sidestep many issues with the supply chain. Prefab construction saves time on the job site and dramatically reduces waste. Assembling pieces off-site allows you to catch mechanical issues before you get to the job site.



If you want to learn more about how prefabricated construction can help offset the impact of rising lumber prices, contact our team today at info@swbuilt.com.


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