Lumber Prices Have Caused an Increase in New Home Prices
According to the National Association of Home Builders (NAHB), “Lumber prices have increased dramatically this decade, making new homes less affordable. Prices averaged $200 per 1,000 board feet during the 1980s; for the 1990s prices have averaged more than $300. The increases have been caused primarily by environmental restrictions on timber harvesting in the forests of the Pacific Northwest.”
“The cost of lumber and wood products accounts for one-third of the costs of materials used to build a home,” said the NAHB. “A typical 2,000 square-foot home uses nearly 16,000 square feet of structural panels, such as plywood. At $400 per 1,000 board feet, the lumber package for a 2,000 square-foot home costs nearly $10,000.”
National Decline in Home Prices Highly Unlikely, Economists Say
With prospects for the nation’s economy slowly improving, interest rates remaining historically low and demand for housing continuing to be strong, there are few risks for a decline in housing prices on the horizon, according to David Seiders, chief economist for the National Association of Home Builders, and Maury Harris, chief economist of UBS Warburg.
“In an analysis of house prices nationally and by major regions of the country, it is difficult, if not impossible, to find prices that look out of alignment with underlying economic fundamentals,” said Seiders. “With the economy and job market in the process of recovering and an interest-rate structure that promises to remain historically low, it is highly unlikely we will be hearing any sizable price bubble bursting this year or in 2003.”
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