It's a pretty shallow analysis that blames rising housing prices on rising lumber prices IMO. Statistics show that both prices and volume for new homes are up, suggesting that both are driven by demand. High demand on housing volume means high demand on materials, many of which are increasing in price as the supply chain works to meet the new demand. (I'm told that labor is also an issue, at least locally, and has as much to do with the high prices as lumber.)
This data shows a strong increase in sales volume following an anomalous negative spike in Mar 2020, attributable no doubt to the pandemic:
https://www.census.gov/construction/nrs/pdf/newressales.pdf
I would say it shows sales over the last year roughly 20% above what one might have projected based on the pre-2020 trend. Most importantly, this very high demand is at prices that presumably include high priced lumber and other materials.
This data was a surprise to me. I had been informed by other sources that the "hot housing market" was driven primarily by low volume. Meaning demand exceeding supply due to low supply rather than high demand. I no longer think this is the case. Both new and existing sales volumes are very high nationwide. Demand is high, driving prices up. Economics 101.
So I'd conclude that the NAHB is not necessarily a neutral news source. I'm sure they'd love to see even higher demand for houses that might result if they could hold the line on price. But if there was a NAYPPD (Nat'l Assoc. of Yellow Pine Producers and Distributors) I suspect they'd blame the suddenly higher than expected demand of the housing market for the shortage and prices. That is certainly my conclusion. I freely admit that I can't explain the higher than anticipated demand on new housing, but I think it is the important question.
- David
