How the Lumber Shortage Is Affecting the Construction Industry

By
RM
Rose Morrison
on November 18, 2021
Wooden Boards stapled

A significant demand surge, ongoing supply chain woes and the impact of climate change have all caused lumber prices to spike to record highs. The construction industry is struggling as a result — and while the end of the COVID-19 pandemic may provide some relief, more problems loom on the horizon.

This is how the lumber shortage is currently impacting construction around the world and the possible long-term consequences it may have.

COVID and Climate Change Drive Lumber Prices to Record Highs

There are two major factors behind the shortage.

The first is the COVID-19 pandemic. The disease disrupted supply chains, forced sawmills to close temporarily, and likely encouraged a boom of DIY projects, driving up lumber demand as most types of spending slowed.

Even now, around 18 months after the pandemic first began, the supply chain is still struggling with disruptions and emerging issues, like record-high levels of port congestion.

The second factor is environmental. Climate change is causing hotter, drier summers and warmer winters. In parts of the world like California, these conditions easily lead to wildfires that further disrupt lumber and related industries. Moreover, some experts believe that as the planet heats, these wildfires could become even more intense.

Fire fighting helicopter carry water bucket to extinguish the forest fire

In some areas, windstorms combined with these warmer and drier environmental conditions have created the ideal breeding conditions for insects like bark beetles. These tiny insects reproduce under the bark of trees, often causing extensive damage and tree mortality.

At the same time, hotter and drier weather is putting significant stress on trees already prone to bark beetle infection. Conifers produce less resin as temperatures rise and rainfall decreases — making them more vulnerable to the beetles.

Infestations of bark beetles in Europe have become so severe that Switzerland, for example, is preparing for the eventual loss of spruce, the country’s most important tree. Nearby countries, like the Czech Republic, Germany, and Russia, are also preparing for the worst.

If weather conditions stay the same or become more severe, bark beetles could continue to be a significant threat to lumber in much of the world.

The imprint of the bark beetle under the bark of the tree

While the worst of the shortage is likely behind us, prices remain high and supply low.

Even after the supply chain and lumber industry recovers from the COVID-19 pandemic, climate change will continue to create problems for both sectors.

Encouraging businesses to adopt more environmentally friendly business practices and reduce their carbon footprints could make a significant difference. However, even bigger changes to how companies operate and consumers shop could be necessary in the near future.

How the Lumber Shortage is Changing Construction

Rising lumber prices and limited supply have made securing lumber much more difficult for construction companies. Supply shortages of other key building materials — like PVC pipes, concrete and steel — also contribute to the problem.

In practice, this has meant projects are delayed, sometimes indefinitely. At the same time, the prices for construction projects that require lumber have risen significantly.

Project delays and increased costs are likely part of why there has been a recent spike in housing prices. Single-family homes became $36,000 more expensive in April 2021 compared to the year before. Rents, typically influenced by rising house prices, are also increasing.

Civil engineer and worker discussing issues at the construction site

Some sectors of the construction industry are faring better than others. For example, while single-family home starts were down 2.8% in August, multifamily starts lept by a massive 21.6%. The numbers for new building permits were also up by 6.0%. The Commerce Department attributed the gains to falling lumber prices and expected the numbers to continue improving.

As sawmills reopen and return to pre-pandemic levels of activity, the lumber shortage will begin to ease. However, it’s hard to tell how or when it will end, and we may have several more months of high prices ahead of us.

While lumber prices tumbled to $389 per thousand board feet in August, they have since shot back up by 40%, increasing to $545. At the time of writing, prices are even higher, hovering around a little more than $670.

There is no clear downward price trend right now like there was just a few months ago.

Before supply returns to normal, contractors should consider using construction management tools with inventory tracking and demand forecasting features to optimize the sourcing and use of lumber. These tools won’t increase the amount of lumber available for purchase, but they can help contractors make the most of what they and their vendors have on hand.

Lumber Shortage May Have a Long-Lasting Impact on Construction

While the lumber shortage may begin to wind down soon, higher prices will likely have a lasting impact on the construction industry.

Climate change may also mean shortages could become a recurring issue. Wildfires, extreme weather, and infestations of bark beetles all make growing lumber much harder and may continue to drive up lumber prices well into the future.


Rose Morrsion, Managing Editor of Renovated.com

“I aspire for readers to reflect more deeply on materials, their vitality, and how they endlessly shape our world and future.”

 

*This article is the work of the guest author shown above. The guest author is solely responsible for the accuracy and the legality of their content. The content of the article and the views expressed therein are solely those of this author and do not reflect the views of Matmatch or of any present or past employers, academic institutions, professional societies, or organizations the author is currently or was previously affiliated with.

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