Six months ago, Andrew Eisma could buy a sheet of OSB for $10.50. His last invoice was more than $20 a sheet.
Like other builders, Eisma has had to adjust to rapidly rising lumber prices over the past year, though industry studies show that the increases have leveled off in recent weeks. Eisma, who works for Martin Contracting out of Missoula, is the supervisor for the Montana Club project on South Main Street in Kalispell.
Eisma said long-term construction projects have been hardest hit by rising lumber costs. Bids that came in several months ago now don’t even come close to covering current market prices. Despite the increased costs, Eisma said the Montana Club is coming along on time and construction should be finished in the next “six to seven weeks.”
“The lumber prices don’t slow down the project but they affect everybody who’s involved financially,” Eisma said. “It’s been quite an increase and someone has to obviously bring it to the owners and say here’s what we bid and here’s what it costs now. To absorb those increases is hard to take.”
According to Random Lengths, a publication that tracks the forest products industry, the composite price for framing lumber was $358 per thousand board feet for the first week of May, down from $367 a week earlier but still far higher than the $206 at the same time last year. April’s average price of $357 was the highest since 2006. The composite price is a weighted average of 15 key framing lumber prices.
While the increase from May of 2009 to 2010 is dramatic, lumber prices aren’t back up to where they were before the housing industry collapsed. The yearly average composite price in 2005 was $387 in 2005 and $404 in 2004, peaking at $473 in August of 2004. The yearly averages over the past two years have been $222 and $252.
Terry Kramer of Kramer Enterprises, and president of the Flathead Building Association, said prices for dimensional lumber – such as 2-by-4s – have only risen by about 20 percent, whereas sheet goods like OSB have doubled.
Kramer doesn’t anticipate the high prices hurting the remodel market much because they only add a small amount to the total price tag of those projects. But he said builders might hold off of bigger projects.
“If (prices) continue to climb, it could hurt our market,” Kramer said.
Stoltze Land and Lumber Co. General Manager Chuck Roady said even if prices are favorable right now, there isn’t enough demand for the lumber to give his facility any significant boost. Construction, even with upticks, is lagging, he said.
“We’re still not anything close to a good market,” Roady said. “But it’s better than it was in 2009.”
“Regardless of what the price is,” he added, “you still have to have someone use the lumber.”
Eisma said other material costs, such as steel, have also gone up. A plumber working on the Montana Club project told Eisma that cast iron pipe is higher as well. Eisma, who primarily does commercial construction, said the increased material costs could hurt the summer building season.
“People are going to downsize because of cost or they’re going to go as far as hold off on a project,” Eisma said. “I would say it’s slowing down some of the projects.”