An ongoing trade battle between Canada and the U.S. over softwood lumber has pushed up the cost of building a typical single-family home by several thousand dollars, according to the National Association of Home Builders, and prices could be going higher yet.
As reported by Construction Dive, the Softwood Lumber Agreement between the two countries expired in October 2015 and a subsequent grace period ended a year later. Fears that the U.S. government would impose new tariffs to compensate for subsidies paid by the Canadian government to lumber producers pushed prices up by 7.2% in the first quarter.
In late April, the U.S. Commerce Department announced countervailing duties for Canadian producers that averaged 20%, with additional anti-dumping duties expected to be announced on June 23.
NAHB Chairman Granger MacDonald told Construction Dive that the tariffs will make houses less affordable for American buyers without doing anything to solve underlying trade issues. With a typical house using 15,000 board feet of lumber, according to MacDonald, the first quarter price hikes alone could add nearly $3,600 to the typical construction bill.
Other estimates were much less dire.
The U.S. Lumber Coalition, which represents softwood lumber producers here, says that the total cost of lumber in a $350,000 house is $6,000, with the new duties adding about $400. “An average home uses 13,000 board feet of lumber,” Zoltan van Heyningen told Construction Dive. “With an average composite framing lumber price of $435 today, it adds up to $5,655 total in the cost for lumber, which makes it impossible for a 20% duty on one-third of that lumber to result in a cost increase of $3,600 to the consumer.”
NAHB said in an Eye on Housing report that April’s 3% increase pushed the softwood lumber price index to its highest level in more than a decade. The price of softwood lumber climbed 10.4% in the first four months of the year.
NAHB also said that gypsum, ready-mix concrete, and OSB all showed price increases.