In a typical housing market, usually new buildings cost more than houses that already exist. After all, you will usually pay more to live in a home with new fixtures and fittings that no one else has lived in before.
But this year the cost of new construction has risen sharply, and the price of lumber is largely related to this. Lumber has been in short supply throughout the pandemic, so its value has risen significantly as demand for it has grown.
But this trend changed in June. In fact, last month sawnwood prices fell more than 40%, the largest monthly drop on record.
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Why is lumber omitted?
During the pandemic, many people took advantage of being stuck at home to play sports. repairs At the same time, supply chain problems made it difficult to access lumber. This surge in demand has led to an increase in the cost of lumber.
But now people don’t spend that much time at home. As the situation on the front of the pandemic improves, people are starting to leave home and go on vacation again, which means they are taking on fewer home improvement projects. And as demand for lumber falls, it becomes more affordable.
To be clear, this is a good thing for anyone buying a newly built home. Earlier this year, average the cost of new construction has risen by about $ 36,000. largely due to overpriced lumber. Now that prices are down, builders don’t have to pass these inflated costs onto buyers.
How to Benefit from Lower Lumber Costs
Now that lumber costs are starting to drop, you may be in a better position to afford your new home. If you are interested in this, analyze your finances to make sure that you mortgage candidate. Since new construction tends to be more expensive than buying an existing home – even with lower lumber prices – you’ll want to get the lowest prices possible. interest rate on your mortgage as you can.
It is a good idea to check your credit report before applying for a mortgage to make sure there are no red flags. You should also check your actual credit rating, because if it is in the 700 or higher range, you are more likely to qualify for the lowest mortgage rates. And if not, you will know what to work on. enhancing it…
Another way to take advantage of the lower cost of lumber is to tackle those home improvements that you have been putting off. If you need to replace a deck or rebuild it from scratch, now is the perfect time.
Has the forest bubble finally burst?
Lumber will not necessarily continue to fall at the same level as in June. But can prices hit record highs again? Probably not soon.
Now that supply is increasing, the cost of lumber may remain stable or even decline further in the second half of the year. This may be bad news for those directly investing in a product, but it is equally great news for builders, home buyers and property owners.