COVID-19 has undoubtedly affected many aspects of the home improvement industry, and lumber supply is one of them. With the soaring price of lumber, many companies have struggled to keep their business open. Here is what you can do to combat the supply shortage.
Overview of the Supply Shortage
In June, the cash price per thousand board feet of lumber increased to 288 percent since April 2020. Before the pandemic, the price was usually between $350 and $500. On June 8th, it was $1,391. This price increase has occurred despite wood production being at a 13-year high.
With COVID-19 came a staggering increase in demand—new housing costs were up 67 percent in June from April 2020. Home improvement sales are also up—in April, they hit an all-time high that was a 31 percent increase from pre-pandemic levels.
This shortage is somewhat due to a perfect storm of factors, such as suppliers cutting production of lumber and unloading their inventory in fear of a crash that did not actually happen. In fact, there was a housing boom as well as a massive surge in DIY projects. On top of that, there have also been new tariffs on Canadian lumber.
With the demand still high, lumberyards cannot build up inventory, so the entire supply chain is still stressed. As a result, there has recently been a drop in price of around $750. However, this might not continue to be the case. The recent wildfires in British Columbia and the upcoming hurricanes in Texas and Virginia will likely affect supply, thus leading to price rising again.
The Effects of The Lumber Shortage
Due to the preparations for a crash that did not occur, the sawmills are supplying for construction and manufacturing and the low inventory. With the continuing high demand, the lumber industry have been forced to focus on immediate needs rather than filling this gap.
The lumber shortage has kept prices high, and they will likely continue to be high. Setzer believes that the price per thousand board feet will probably stay between $600 and $1,000 in the long term rather than go back to pre-pandemic prices.
However, it may not continue in this fashion, with natural events coming into play, such as the wildfires in British Columbia and upcoming hurricanes. These events could disrupt supply again, driving prices back up as supplies become more scarcer.
How Are Businesses Adapting to the Lumber Shortage
Maintaining homeowner relationships during a supply shortage is essential. The best way to do so is to stay in touch; in a recent survey of homeowners, they said that a lack of communication was the attribute that was most likely to cause them not to hire a contractor.
When the contractor is open about what is happening, offering updates and timelines, and discussing details about the project, the relationship between the contractor and the homeowner is strengthened, and customer satisfaction is increased.
Additionally, it is often the case that better relationships lead the homeowner to continue working with the contractor for future projects. Other than transparent communication, it is best to be clear about realistic expectations. This is especially true with a supply shortage.
Being upfront with how much lumber can be used within a given budget is important information for the homeowner. Overpromising and underdelivering is a good way to leave a customer unsatisfied. In summary, having good communication and being realistic about the project will lead to a better homeowner relationship, leaving everyone more satisfied than had it been otherwise.