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The pandemic-driven boom in construction of single-family homes, apartment communities, and DIY home improvements has been a bright spot for the U.S. economy, but a troubling phenomenon is putting this economic lifeline at risk. American lumber producers have been unable or unwilling to meet the market’s demand.

As of mid-February, the price of lumber reached historic highs, and today various grades cost three times as much as they did just one year ago.

J. David Heller, president, CEO, and co-founder, The NRP Group
J. David Heller, president, CEO, and co-founder, The NRP Group

Given current lumber pricing, the affordable housing industry is deeply concerned about its ability to continue to meet the insatiable demand for affordable housing production, as well as the ability of low-income families to find safe, affordable housing in both urban and rural areas.

Several factors have contributed to the price volatility plaguing the lumber industry. Eleven months ago, mills shut down across Oregon, Washington, and most logging-dominant states much like many other workplaces across the country as part of COVID-19 mitigation measures. Once local lockdowns were eased, mills did not reopen at full capacity under an incorrect assumption that the dramatic rise in unemployment seen in the second quarter of 2020 would forestall housing construction and tamp down demand for their product.

Instead, Americans seeking less crowded housing conditions poured into the suburbs—buying, renting, and building home additions at surprisingly high rates. Historically low mortgage rates stoked this demand for suburban housing.

Caleb Roope, founder and CEO, The Pacific Cos.
Caleb Roope, founder and CEO, The Pacific Cos.

Perhaps most concerning, our analysis shows lumber manufacturers should have the capacity to meet current demand. Housing starts are still 25% lower than a previous high-water mark reached in 2006. We need to work together to determine what is standing in the way of pushing production to levels achieved 15 years ago that would allow us to meet current demand at a price that allows affordable housing projects to move forward.

For our business—the production of high-quality affordable housing in partnership with municipalities and not-for-profit organizations across the country—the consequences of record-high lumber prices have been dire. Even for national-scale affordable housing producers, out-of-control lumber pricing can add millions to the cost of development.

Tom Tomaszewski
Tom Tomaszewski

Those who need affordable housing the most—the front-line and essential workers who have been most severely affected by the pandemic, and all those classified as rent-burdened—will find themselves waiting longer for homes of their own.

As the economic impact of COVID-19 continues to linger, it is not just the people who reside in affordable housing that will be affected. The affordable housing construction industry supports 5.2 million jobs and generates $206 billion in tax revenue for local, state, and federal government. Delays to shovel-ready projects will be a drag on America’s post-pandemic economic recovery for at least the next decade.

As such, we call on our federally elected and appointed leaders to take a proactive, multipronged approach to resolve the failure in the lumber market, which is having a catastrophic, cascading effect throughout the U.S. economy.

First, we join the National Association of Home Builders and other industry associations in calling for President Biden to use his position of authority to urge domestic sawmill owners to ramp up production.

Second, President Biden must make returning to the negotiating table with Canada a priority, with the goal of reaching a new softwood lumber agreement and ending Canadian lumber tariffs.

Finally, the Department of Commerce must investigate why lumber production remains at such low levels during this period of high demand.

The alternative? Devastating delays in the construction of affordable housing coast to coast, compounding COVID-19’s negative impact on local economies and our society’s most vulnerable members.