"Things Are Out Of Control": Supply Chain Collapse Leads To Lumber Frenzy, Soaring Home Prices

With median prices for both existing and new homes at all-time highs, and soaring at a record annualized rate of almost 20%...

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... increasingly more Americans find themselves priced out of homeownership, while still cautious banks refuse to lend them the mortgages they so desperately need to live the American Dream (on credit).

And unfortunately, since most US houses are made out of wood, we have even more bad news: home prices are about to get even more expensive if for no other reason than the frenzy sweeping the lumber market is set to keep going through the summer peak of US home building as labor shortages and depleted inventories mean that supplies can’t keep up with skyrocketing demand.

As Bloomberg summarizes what we have observed across the past few months of torrid, sometimes panicked, ISM Survey Responses such as this one...

“Things are now out of control. Everything is a mess, and we are seeing wide-scale shortages.”

...there is an unprecedented shortage and tightness across the entire timber supply chain. Sawmills have had trouble ramping up fast enough to meet the surge in demand. Meanwhile, trucking delays and worker shortages at lumber yards have added to costs, which are now getting passed on to consumers. Worst of all, the bigger cost component of any new house l Lumber prices - have surged more than 60% to record highs this year, and analysts aren’t expecting any relief until late 2021, if not later.

That, according to Bloomberg, will keep pouring fuel on red-hot home prices, making ownership less affordable for large swathes of the population (one would almost think it was the Fed's plan to destroy the middle class). Soaring wood costs have already added more than $24,000 to the price of the average new U.S. house, according to National Association of Home Builders, while industry groups and lawmakers have called on the Biden administration to step in and find remedies for the lumber shortage.

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