The price of lumber is way down, but that won’t do much to bring down new home prices

The price of lumber jumped over the past few years, thanks to snarled supply chains and surging demand. Now, it’s way down compared to last year. However, that likely won’t mean lower prices for new homes.

Relatively speaking, it’s much cheaper to buy lumber now than it was a year ago. But that’s compared to an unprecedented price spike, said Crystal Gauvin, a senior economist at Forest Economic Advisors.

“As an economist, it ruined our graphs, because you have what historically was a lot of volatility just got blown out the window and looks like a straight line now,” she said.

But that’s not likely to bring down the cost of new homes, according to Gauvin, due mostly to the high cost of pretty much everything else.

“We see that in electrical and plumbing and concrete and sheetrock and roofing,” said Bart Frisbie, president of the contracting firm Sterling Homes in South Burlington, Vermont. “While lumber has receded, and that is extremely helpful, many of those other costs have not and probably never will,” he said.

One big factor, Frisbie said, is labor. Companies that supply him with all those other materials are still having trouble finding enough workers.