Lumber Prices on the Rise in 2017

Softwood lumber prices hit their highest levels since September 2004, rising 13.4 percent year-over-year in April, according to the National Association of Home Builders.

Lumber trade woes between the U.S. and Canada are behind the steady price increase. The trade agreement that has governed Canadian imports of softwood lumber since 2006 effectively expired at the end of 2016. The softwood lumber dispute reached a milestone of certainty in April, when the U.S. government announced an average 20 percent tariff on Canadian softwood lumber imports.

NAHB estimates the looming tariffs could increase the cost of a new home by $3,600. Another concern, if Canadian mills look to other countries for their exports, U.S. home builders could face shortages unless domestic manufacturers can ramp up their own production in time.

Experts say it will be several months before the full impact of the new taxes is felt, since many builders negotiated deals in advance. The future of lumber prices are highly uncertain, but, price trends in the 2001-2006 price negotiations may offer clues as to what lies ahead.

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