Industry applauds shipping reform legislation

In the housing industry, the key commodity lumber is among the backlogged supplies.

In an interview with MPA earlier this year, Brian Leonard, a lumber analyst with RCM Alternative in Chicago, noted the volatility. “We had an incredibly volatile year. We went up to $1,700, down to $400. In historic levels, $650 was the contract high before. There was a substantial gain.”

The price of lumber is calculated based on a board foot as the measurement of volume. The single piece of lumber is the equivalent of one square foot (12” by 12”), and one inch thick. Typically, Leonard noted, a rail car would carry 110,000 board feet worth of the commodity, valued at some $170,000 per car.

Yet price spikes aren’t limited to lumber. According to recent data from the Producer Price Index report released by the Bureau of Labor Statistics, the price of goods used in residential construction rose by 1.5% last December. Building materials prices increased 16% last year, the data show, and have risen 18.8% since December 2020.

“We just saw a COVID slowdown in construction and a boom in the housing market,” Leonard noted. “The housing market was getting better, and then it just took off. After last year, when it declined to the $400 mark, a lot of the distribution side of it did not want to re-enter the marketplace. So even while demand stayed strong, we weren’t filling inventories. By December, the market just took off because people needed wood for job sites, and it wasn’t available in the distribution chain.”