There is definitely a positive upward trend in residential home building. After years of weak demand for new construction, builders in most regions of the country are finally seeing more activity, bidding more work and signing more contracts. A critical consideration in this trend is therising cost of lumber, perhaps the single biggest cost factor in new home construction. Dimensional lumber, like most commodities, has fallen victim to the inflexibilities of supply and demand. Exacerbating matters is five years of downward commodity pricing pressures matched alongside brutal competitive pricing. Now it appears all hell is breaking loose.
The same can be said for hardwood flooring. As of this writing, most sources report flooring oak lumber prices have increased a whopping 40% since the end of 2012. And unfinished strip and plank flooring is a prime example of a pure commodity product. So manufacturers have been forced to raise prices at a rapid pace. The Hardwood Market Report(www.hmr.com) has been publishing prices weekly since 1922. Hardwood flooring prices have always dropped in times of recession, and increased robustly in times of market growth. But excluding the Great Depression, the last three generations in this country have not witnessed such a prolonged depressed market. Having created enormous pent-up demand, we are again sailing in uncharted inflationary waters.
There is definitely a positive upward trend in residential home building. After years of weak demand for new construction, builders in most regions of the country are finally seeing more activity, bidding more work and signing more contracts. A critical consideration in this trend is therising cost of lumber, perhaps the single biggest cost factor in new home construction. Dimensional lumber, like most commodities, has fallen victim to the inflexibilities of supply and demand. Exacerbating matters is five years of downward commodity pricing pressures matched alongside brutal competitive pricing. Now it appears all hell is breaking loose.