In spite of a continued lumber shortage and supply chain issues that are affecting the availability of construction materials, the price of lumber has started falling. USAToday.com reported that lumber prices fell to less than $600 per thousand board feet this month, which is the lowest price all year. It’s also less than half the price of $1,357 per thousand board feet three months ago, according to Statista.com. Today’s price, however, remains elevated over 2020’s high of $400 per thousand board feet.
As lumber prices continue to drop, the price for new homes may also begin to fall, since 9 out of 10 new homes in the U.S. use wood framing, according to the National Association of Home Builders (NAHB), as reported by MSN.com.
But will falling prices for new homes be the boost the nation needs when it comes to having enough affordable housing? Moody’s Analytics reported that the U.S. needs roughly 1.5 million homes to keep up with current demand.
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In mid-May, President Joe Biden announced plans to take action to close the U.S. “housing supply gap” within the next five years, USAToday.com reported. The Federal Housing Finance Agency has begun working with lenders to offer financing to construct or renovate “accessory dwelling units,” such as garage apartments and in-law suites.
The Biden administration is also looking at other steps to increase federal assistance to finance factory-built, modular, and mobile homes.
It’s likely this executive action will still be needed. Even though lumber prices may be falling, there is still a shortage of not just materials, but labor, for new home construction. A multitude of steps must be taken to solve the housing shortage and increasing the construction of affordable homes is just one factor.
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This article originally appeared on GOBankingRates.com: Could Falling Lumber Prices Have a Positive Effect on the Housing Market, or Is Executive Action Still Needed?