The price of a key building material is more unpredictable today than it has been since the end of World War II. And that should worry home buyers and renters alike.

A recent analysis from the National Association of Home Builders examined the recent uptick in the cost of building materials, which climbed 1.5% in December per the Bureau of Labor Statistics. The overall increase was driven largely by the rising cost of lumber.

The price of softwood lumber has increased nearly 45% since September, per the data from the federal government. Other data suggests that the price mills are charging for lumber used to frame homes has tripled since August.

Rising prices are one problem, but volatility is another. Over the course of the pandemic, lumber prices have fluctuated dramatically. Between 1947 and 2019, the monthly change in the price of softwood lumber averaged 0.3%. Since January 2020, though, it has averaged 12%.

Not only is that the highest average monthly change over a two-year span since this data first started being collected in 1947, but it is nearly three times the previous record, according to the report.

That volatility is producing ripple effects throughout the housing market — a market that is currently struggling due to the record-low inventory of homes for sale.

“When you introduce the cost volatility that you see in major products like lumber, it just makes it that much more difficult for builders to expand their level of home construction, which in turn, reduces the available inventory in the market,” said Robert Dietz, chief economist at the National Association of Home Builders. “So the cost volatility you see in the construction space is in part responsible for some of the price gains in the overall housing market.”

It’s difficult to undersell the importance of lumber to home builders. All told, 90% of the single-family homes built in this country are wood-framed, Dietz said. Comparatively, just 9% are concrete-framed, while the rest are steel-framed.

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