Explaining the Lumber Shortage

Henry Grabar addresses a question currently puzzling Americans.

On the demand side, the lumber issue is relatively straightforward: Americans are flush. Interest rates are low. Wealthier households are buying pandemic-proof second homes or diving into long-awaited renovations. Younger families are trying to buy starter homes and settle down. Many multifamily builders have turned to timber as well, which is now commonly used to frame five- or six-story buildings. All that has created enormous demand for wood.

But the case of lumber supply is a little more perplexing. True, shipments from Canadian forests, which contribute about one-third of U.S. lumber consumption, have been constrained by tariffs, beetle infestations, and wildfires. But there is plenty of wood on both sides of the border, and fast-growing pine in the U.S. South is actually cheaper than it’s been in two decades. …

Instead, the culprit is the decade of instability and low prices that followed the Great Recession, when America stopped building homes, leaving the lumber trade out to dry. The stunted recovery stripped the industry’s crucial middlemen—the mills themselves—to the bone. Building a new deck is expensive now because mills can’t ramp up to meet the demand surge—or won’t, nervous they’ll get caught with millions in underused machinery when prices crash back to earth.

RTWT

HT: Karen L. Myers.