Lumber Report Flags Supply Chain Volatility
A new 'State of the Industry' report from lumber leader ProWood highlights ongoing volatility in raw materials and transportation costs for the building sector. The report also points to acute workforce challenges, as companies adapt to new expectations from both employees and homeowners.
The construction industry is projected to be short by an estimated 439,000 workers in 2025, a figure expected to climb to 499,000 in 2026. This significant labor gap contributes to project delays and increased labor costs, with average hourly earnings in construction already having risen 4.4% over the past year. The shortage is intensified by a wave of retirements, as approximately one in five construction workers is over the age of 55. After extreme volatility, lumber prices have settled into more predictable seasonal trends but remain above pre-pandemic levels. Forecasts for 2025 suggest prices will likely stay within the $500-$600 per thousand board feet range. However, factors like tariffs on Canadian lumber, which are expected to rise, could drive up short-term construction costs. Transportation costs can represent 10% to 20% of a construction project's total budget. These expenses are often embedded in the material costs from suppliers, meaning the "free delivery" model masks the true financial impact of logistics on building materials. Delays in transit not only escalate costs but can also significantly disrupt project timelines. Post-pandemic, homeowner priorities have shifted towards durability, longevity, and craftsmanship. There is a growing demand for larger living spaces, private outdoor areas, and flexible rooms that can serve as home offices or gyms. This evolution in homeowner expectations is influencing new home designs and renovation projects.
