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March 5, 2018

Trump’s softwood lumber tariff is forcing American homebuilders to cut costs

As reported on Bloomberg.com, for the past 18 months, Eddie Martin has been trying to find ways to keep the affordable homes he builds, well, affordable.

About 40 percent of the Texas homebuilder’s framing lumber comes from Canada. The Trump administration slapped punitive tariffs on Canadian softwood timber last year, claiming the industry is unfairly subsidized. The move has driven lumber prices to near record highs. Tilson Home Corp., where Martin is president, has so far refrained from passing on the added costs to homebuyers. To do that, it’s cut back the number of home plans it offers and is considering swapping pricier fir for cheaper Southern yellow pine, even though its tendency to bow in the Texas humidity makes it more difficult for construction crews to work with.

“If it stays up and we feel like we need to try and raise the price to try and recoup some of that, it’s very difficult for us as a company,” says Martin, whose business builds about 400 homes a year across the state. “It’s imperative we keep our prices in the range where we can sell the house.”

Framing lumber, including installation costs, accounts for about 18 percent of the average home’s selling price, according to the National Association of Home Builders. The rising price of timber comes at a bad time for U.S. builders, which are already contending with labor shortages and scarce supplies because of summer wildfires that wiped out some timberland in British Columbia. “You’ve got the kind of perfect storm brewing for the homebuilder,” says Jim Barbes, vice president of national sales at 84 Lumber Co., one of the nation’s largest building-supply chains.

Keep reading on Bloomberg.com


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