Lumber Costs Affect Construction Prices

Residential building construction prices rose 7.5 per cent in the second quarter, the largest increase since the series began in 2017, accelerating from a 4.9 per cent increase in the first quarter, says Statistics Canada. Non-residential building construction prices (+3.7 per cent) grew at their fastest pace since the second quarter of 2008. Construction costs for single-detached houses and apartment buildings contributed the most to the residential building construction price growth in the second quarter. The price increase for non-residential construction was mostly attributable to office buildings, warehouses, and shopping centres. Higher residential building construction prices in the second quarter were largely due to record high lumber and wood product prices. Prices for lumber and other wood products increased by 27.9 per cent from the first to the second quarter of 2021. This price surge was due to ongoing supply chain constraints, combined with high demand for new houses and renovations in the wake of changing preferences for more space during the pandemic, as well as low interest rates. The supply chain constraints included ongoing operational delays at sawmills, as well as transportation difficulties.