The biggest factor is supply and demand. The global demand for lumber has skyrocketed since the world went into lockdown. Wood products prices typically fluctuate more than most goods, because homebuilding can move up or down much faster than sawmill capacity can. Wood products have other uses that are more stable, such as non-residential construction, crates and pallets, but new housing is the largest usage, followed by home repairs and remodeling, and both of those activities are highly cyclical.
Wood is fairly abundant, in North America, especially in the southern forests. Modern mills are very efficient at turning logs into 2x4s and sheets of plywood. Lumber and plywood prices are so high now because of the short-run dynamics of demand and supply.
Wood demand shot up in the summer of pandemic. Many homeowners were stuck at home, unable to vacation. With time and money on their hands, they headed to the local building supplies dealer for the materials to build decks, playhouses, she-sheds and even additional rooms.
Ultimately, as the demand for lumber continued to increase over the past few months, supply has not been able to catch up, resulting in an increase in lumber’s cost by 340% or more in particular locations.
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