With lumber prices experiencing extreme price volatility this year and harming housing affordability, a final determination by the U.S. Commerce Department to reduce duties onshipments of Canadian lumberinto the United States by more than half is good news for American home builders and home buyers.
“The Commerce Department’s action to reduce duties from more than 20% to 9% on softwood lumber shipments from Canada into the U.S. is a positive development, but more needs to be done,” said Chuck Fowke, chairman of the National Assn. of Home Builders.
“Tariffs [established in 2017] have contributed to unprecedented price volatility in the lumber market in 2020, leading to upward pressure on prices and harming housing affordability for American consumers.”
This latest development on the tariff front comes at a particularly opportune time, with the Random Lengths Framing Composite Price moving lower since mid-September but still up more than 60% since mid-April.
Lower tariffs would mitigate uncertainty and associated volatility that has plagued the marketplace, which could help ease upward price pressure on lumber prices.
Another positive development is that housing construction and new home sales have moved forward at a robust pace in recent months as lumber prices have receded from unprecedented highs. Lumber prices peaked above $950 per thousand board feet in September and are now down to roughly $560 per thousand board feet–which is still at an extremely high historical level.
Elevated lumber prices since mid-April have added thousands of dollars to the cost of new single-family homes and apartment units. Indications are that lumber producers are reducing production heading into the slower winter building season, even as new residential construction continues to outpace seasonal norms.
However, the Commerce Department’s administrative review of countervailing duties on Dec. 1 resulted in the positive news on the lumber front regarding tariffs on Canadian softwood lumber.
“This is a step in the right direction, as tariffs have contributed to unprecedented price volatility in the lumber market, leading to higher prices and harming housing affordability for American families,” said NAHB Chairman Fowke. “The United States needs to work with Canadian officials to end the tariffs and achieve a long-term, stable solution in lumber trade that provides for a consistent and fairly priced lumber supply.”