As our economy battles back from the coronavirus-induced recession, housing has experienced the strongest rebound among individual economic sectors. From nearly the beginning of the pandemic, residential construction was deemed essential, ensuring residents a safe place to shelter. With mortgage applications high due to lower rates, demand for single-family homes remains a bright spot for the overall economy. In fact, through July of 2020, single-family permits were running 8 percent higher nationally compared to the same period in 2019.
However, that recovery leg is threatened because of astronomical increases in lumber costs. Insufficient domestic production and tariffs on Canadian sources have led to a staggering shortage that has skyrocketed prices. Since April, lumber prices have escalated more than 170 percent, resulting in a typical new single-family home increase of $16,000. Such sharp rises are unsustainable and will constrain housing supply, thereby exacerbating existing housing affordability woes.
The public must be made aware of this crisis and its impact on our economic recovery and the American dream of homeownership. The White House needs to hear about it. On behalf of The Greater Iowa City Area Home Builders Association (and as such a member of the Home Builders Association of Iowa and the National Association of Home Builders), I encourage community members to contact their congressional representatives and ask them to speak to the Trump administration about addressing soaring prices and the growing shortage by:
• Urging domestic lumber producers to ramp up production.
• Making it a priority to work with Canada on a new softwood lumber agreement.
The housing industry can do its part to continue creating jobs and leading the economy forward, only if the administration addresses lumber prices and scarcity. Building 1,000 average single-family homes creates 2,900 full-time jobs and generates $110.96 million in taxes and fees for all levels of government to support police, firefighters and schools. And I haven’t event touched on multifamily homes and remodeling projects.
The numbers continue to escalate. Action is needed now.
Glenn Siders of Siders Development is president of The Greater Iowa City Area Home Builders Association.