Lumber prices continue to rise despite a temporary tariff suspension from the Trump administration, adding pressure on builders who must factor in higher construction costs for new homes.
On March 6, President Trump postponed a 25% tariff on goods arriving from Canada and Mexico until April 2. While the suspension applied specifically to products covered under the United States-Mexico-Canada Agreement, it also exempted softwood lumber products from north of the border, according to the National Association of Home Builders.
Despite the reprieve, uncertainty about future prices fueled further volatility. The framing lumber composite price accelerated by 4.8% for the week ending March 7 to finish at $483 per 1,000 board feet– the fastest pace since June 2023, NAHB said.
The short-lived tariff surcharge initially went into effect March 4 following another earlier delay from the originally proposed start date in February.
Lumber prices are now 15.8% higher than they were one year ago, the association added, with some of the costs likely to be passed onto the consumer. Along with softwood lumber used in construction framing, several other products made from the material, including plywood and particleboard, also contribute to construction expenses.
If implemented, any tariff would add further stress to builders already dealing with elevated costs on imported Canadian lumber products. A 25% increase would be stacked onto an existing 14.5% tax set by the U.S. Department of Commerce.
NAHB warned that the total tariff on Canadian lumber could rise to 39.5% by April 2, with the Commerce Department signaling a potential doubling of the 14.5% rate later this year, possibly in September.
At the same time, lumber futures increased over the previous week to close at $642.00 on Friday. They were up 1.6% from the prior week and 11.9% annually, according to the association’s analysis. Year to date, lumber futures have risen 9% after ending 2024 below $600.00.
Among its efforts to combat effects of any import tax, NAHB said it would advocate for a long-term agreement with Canada to reduce lumber costs and seek to raise domestic production.
The new focus resulting from the trade conflict to increase domestic lumber output is also leading to the launch of a new futures trading exchange specifically looking at U.S. Southern pine production.
Trading on Southern yellow pine futures and options will begin March 31 on the Chicago Mercantile Exchange. Southern pine, which is heavier than much of the product originating from Canada, is not currently included in lumber futures, but potential import taxes on the horizon warrant a new exchange, some traders say.
In a separate move, the Trump administration imposed an across-the-board 25% tariff rate on all steel and aluminum imports early Wednesday morning. Canada is the biggest provider of the metal imports to the U.S., with the materials used in several appliances and components standard in a new home.
President Trump briefly threatened to double the level on Canada to 50% after Ontario Premier Doug Ford said he would add a 25% tariff on energy exports to the U.S. coming from his home province. Both leaders pulled back on their proposals late Tuesday.
NAHB estimates that all tariffs combined would raise the cost of construction materials for builders by more than $3 billion.
Builders are likely to quickly feel the effects of rising lumber prices particularly, with wholesalers “trigger happy,” once costs begin to increase, NAHB said. Declines, on the other hand, take more time to reach homebuilding companies.
