Homebuilders are quickly feeling the impact of the looming rise in Canadian lumber tariffs, as more homebuilders are concerned about the availability of building materials.

According to the May 2017 survey for the NAHB/Wells Fargo Housing Market Index, the availability of building materials, especially framing lumber, significantly jumped on the list of homebuilder concerns, revealing that 21% of single-family builder respondents reported a shortage of framing lumber.

"It is certainly concerning that we have seen such a large jump in reported framing lumber shortages in a relatively short period of time," said National Association of Home Builders Chief Economist Robert Dietz. "The rising reports of shortages along with the recent increases in softwood lumber prices, can almost certainly be related to the ongoing softwood lumber trade dispute between the U.S. and Canada.”

At the end of June, U.S. Secretary of Commerce Wilbur Ross announced another proposed Canadian lumber tariff in addition to the tariff the Trump administration announced in April on Canadian softwood lumber imported into the U.S.

The problem is that the U.S. is in an extreme deficiency of lumber and depends on lumber from Canada. NAHB crunched the numbers and found that in 2016, the U.S. consumed more than 47 billion board feet (bbf), while it produced slightly more than 32 bbf.

As a result, the U.S. heavily relies on foreign sources of lumber, and Canada makes up for 96% of this domestic shortfall.

According to NAHB, the potential 30% jump in Canadian softwood lumber would jeopardize affordable housing in America. Softwood lumber is made from trees that have cones, such as spruce, pine and fir. It’s primarily used in home construction, and the U.S. is also Canada’s biggest export market.

Looking at the latest NAHB survey, homebuilders are already feeling the burdens of the tariff.  In 2014, no product or material was cited as being in short supply by more than 15 percent of builders. This also remained true for most other materials in the 2017 survey.

However, framing lumber is an exception. Only 8% of builders reported a framing lumber shortage in July of 2014, but that share more than doubled in May of 2017, to 21%, a post-housing recession high.

NAHB noted that the last time framing lumber shortages were as widespread was in October of 2004, at a time when the annual rate of housing starts was around 2 million, compared to the current rate of about 1.1 million.

"Lumber is a major component in new home construction, and it is critical that we continue to have a sufficient and fairly priced supply to keep up with housing demand," said NAHB Chairman Granger MacDonald. "These reports of framing lumber shortages and rising prices only harm housing affordability and price countless American households out of the housing market."

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