Why the price of lumber doubled during November

WINNIPEG -

Lumber prices are the highest they've been since a record was set this spring, meaning Canadians will be shelling out more for new homes and building supplies.

Jason Zarrillo runs Stand Tall Contracting, a general contracting business in Winnipeg.

Due to price uncertainty, he had to create a rule that quotes are only good for 30 to 60 days.

"It's been really difficult for us and frustrating for us because we want to give the best prices," he said. "With the volatility of lumber going up and down, our prices constantly fluctuate."

In November, lumber futures were trading on the NASDAQ at $606 per thousand board feet.

Fast forward to December, and it's now $949 per thousand board feet—about a 40 per cent increase in the span of a month.

While a large jump, the current price for lumber is still about 45 per cent lower than the record high set in May.

According to the Western Retail Lumber Association, a major factor in the recent cost increase was the B.C. flood.

"A lot of the lumber production that supplies both Canada and other export markets come from B.C. The impact of the weather has put a lot of strain on the transportation and the ability to harvest logs," said Liz Kovach, president of the WRLA.

Another reason for the rise in prices is the booming housing market.

"Manitoba's residential builders are continuing to see strong market conditions and housing starts, and multi-family and apartment construction continues to be very strong," read a statement to CTV News from Lanny McInnes, president and CEO of the Manitoba Home Builders Association.

On top of high demand in Canada, a new 18 per cent tariff on softwood lumber implemented by the U.S. in November prompted American buyers to stockpile.

"In preparation of that, our mills did see some order files increase from the U.S.," said Kovach.

According to Kovach, expensive lumber is here to stay, but the price could drop in the coming days.

"The prediction is, is that the prices will not go back to where they were, and then in 2022, we will start to see them come back down. But our crystal ball got broken a long time ago, so we aren't 100 per cent sure," noted Kovach.

With lumber prices set to remain quite high, it means builders and contractors will be forced to charge more.

"So what happens is we have to pass that on to the consumer, and unfortunately, they are going to have to pay for that," said Zarrillo.