Lumber prices impact North Shore home construction
Minnesota homebuilders remain poised to benefit this spring and summer amid strong demand, low mortgage rates and an all-time low inventory of previously occupied homes for sale. But soaring lumber prices and a shortage of construction-ready land could limit their ability to capitalize on the strong housing market trends, the Associated Press reports.
The price of lumber more than doubled over the last year to an all-time high, reflecting strong demand for new construction and home remodeling, and pandemic-related problems limiting production.
The sharp rise in the cost of lumber, among other building materials, is a concern to builders because it drives up costs, potentially shrinking the pool of would-be buyers who can afford to purchase a home.
Monica Haynes is the director of the Bureau of Business and Economic Research at the University of Minnesota Duluth, which collects, analyzes and disseminates information regarding the economy of Duluth and northeastern Minnesota. Her areas of concertation include regional economics, energy, tourism, local industry and economic impacts.
“According to the National Association of Home Builders, increases in the price of lumber and metal have increased the cost of new, single-family homes by $16,000, on average,” Haynes said.
Adding to the mix is the historically low housing supply parts of the region have seen over the past year and home prices are skyrocketing, Haynes said.
“This is significant, especially for first-time home buyers, who tend to be much more price sensitive,” she said. “The current sellers’ market is creating a new population of home renters, people who in years past would have been able to afford a home but are now getting priced out.”
Haynes spoke with WTIP’s Joe Friedrichs about this topic and what it means for Cook County homebuyers, homeowners and the construction industry. The audio to their conversation is posted below.
The Associated Press contributed to this article.