The Real Deal Los Angeles

Wildfires and a trade dispute with Canada are creating a US lumber shortage

Higher prices are passed on to builders and eventually homeowners
March 01, 2018 10:00AM

(Credit: Wikimedia Commons)

A perfect storm of politics, logistics, and natural disasters has created a shortage of lumber that’s become a bona fide “crisis,” for suppliers, industry experts say.

Suppliers are having a hard time getting material to builders, and wood that does make it to construction sites comes at a premium, according to a report in the Wall Street Journal. That is making home building more expensive, and could affect what builders anticipate will be one of the busiest years for home construction in recent memory.

One Colorado-based builder told the Journal he’s spending $8,500 more on a typical home than he did a year ago.

Initially, what set prices rising were a series of wildfires last year in Canada’s forests big enough to be seen from space and a U.S.-Canada trade dispute. That disagreement had U.S. suppliers hesitant to resupply at higher prices.

Trade disputes between the U.S. and Canada date back to the 1980s, but periodic agreements have temporarily settled them. They flared up again when the Trump administration set a 20 percent tariff on Canadian lumber imports last year, after negotiations for another agreement fell apart, the Washington Post reported.

Bad weather up north late last year and a shortage of train cars and trucks to transport the lumber have compounded the situation, experts say. Rates for flatbed trucks rose 24 percent in January compared to a year earlier, the Journal reported.

“We’re in a lumber supply crisis,” Kansas City, Missouri-based lumber broker Stinson Dean said in an analyst note to investors. “None of us have experienced a market like this.” [WSJ] – Dennis Lynch