Like the metaphorical frog in the boiling pot, softwood lumber prices have risen steadily, but noticeably: just 2.3% in March, but 12.9% since March of last year. Certain products have seen a 25% price increase since 2015.
Stirring the pot is President Trump, who just imposed a 24% tariff on Canadian lumber. US lumber can expect to see a boost, but component manufacturers or suppliers could see lumber become a bigger line item in their budgets this year.
Then again, the move did not come as a surprise to most of the industry. Before the decision was announced, Canadian investment bank RBC Capital Markets predicted more drastic tariffs of 30-40%. The 24% tariff may turn out to be more manageable for customers.
As RBC Capital Markets analyst Bob Wetenhall recently reassured the public, the lumber tariff is not expected to impact the housing market, profitability, or even home prices. The April NAHB Housing Market index fell three points in April in response to the decision but remains largely positive.
Overall construction materials prices have risen as well, though not to the degree of lumber. According to latest Bureau of Labor Statistics’Producer Price Index, material prices are up 4.4% year-over-year.