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December 8, 2021

Why is the Biden administration increasing the cost of building houses?

The average American home is now more expensive than it’s ever been. For homeowners, that’s probably great news. For renters and would-be homebuyers, it’s a calamity. A big part of the reason for surging prices is a lack of new housing supply. And to build new houses, you need lumber.

With surging demand and lackluster supply, lumber has gotten absurdly expensive during the coronavirus pandemic. At its height, in May, the price of lumber futures hit more than $1,600 per thousand board feet, more than four times what it averaged in the five years before 2020. In April, the National Association of Home Builders (NAHB) estimated that increased lumber prices added almost $36,000 to the average price of a single-family home.

The price of lumber dipped this summer as production picked back up from its early-pandemic slump and cash-conscious DIYers and other woodworkers decided to delay their projects. But lumber prices have remained abnormally high, and they’re now surging again. It’s a big headache for homebuilders and a roadblock to making housing more affordable.

The White House has declared that “President Biden is committed to using every tool available in government to produce more affordable housing supply as quickly as possible.” Yet on Nov. 24, Biden’s Commerce Department announced it was doubling duties on softwood lumber imported from Canada, from an average of 8.99% to 17.9%. Softwood lumber is a crucial material needed to build houses, and levying a large tax on imports only hurts the cause of expanding housing supply.

The NAHB — which represents homebuilders, which, naturally, have an interest in low lumber prices — is unhappy with Biden’s policy. “With the nation in the midst of a housing affordability crisis, the Biden administration has moved to slap a huge, unwanted tax hike on American home buyers and renters,” said NAHB Chairman Chuck Fowke in a statement.

Keep reading on NPR.org


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