Lumber Prices Are Rising Again — And That Could Keep New-Home Costs Elevated
Image courtesy of Moneywise
Higher softwood lumber prices are becoming another challenge for homebuilders and buyers. Wildfires affecting forest regions in British Columbia, combined with U.S. trade tariffs, are putting pressure on the cost of one of the most important materials used in new-home construction.
For Canadians, this does not mean every home will suddenly become more expensive. But it does reinforce a larger issue: when building costs rise, it becomes harder for developers to deliver new homes at prices first-time buyers can comfortably afford.
Why lumber matters
Lumber is used throughout the construction process, from framing and flooring to roofing, concrete forms, and finishing work. When lumber prices rise, builders face higher costs before they have even accounted for land, labour, financing, permits, development charges, and taxes.
The article notes that Western Spruce Pine Fir futures were around $653 per thousand board feet in late July, up from approximately $524 in late January. That increase is being linked in part to wildfire risks in British Columbia, where fires can disrupt supply and create uncertainty for producers.
Trade policy can add another layer. Tariffs affecting Canadian softwood lumber exports can reshape demand and pricing across North America, and ultimately add volatility to a supply chain that builders depend on.
What this means for housing
Construction costs do not translate dollar-for-dollar into a home’s purchase price. In a slower market, a builder may absorb some costs, reduce incentives, delay a project, or redesign it to protect margins.
But when costs remain high for a sustained period, something usually has to give. That may mean higher list prices, fewer upgrades included in the base price, smaller unit sizes, delayed launches, or fewer projects moving ahead at all.
For rental housing, the impact can also be delayed but meaningful. If it costs more to build rental units, developers may require higher expected rents to make a project viable. That can make it even harder to add affordable rental supply.
An applicable example
Imagine a couple purchasing a newly built townhouse priced at $850,000. They have their down payment saved and are focused on qualifying for the mortgage.
If escalating material costs push the builder’s final price up by even $20,000 before the purchase is finalized, the buyers may need an additional $1,000 in down payment to maintain a 5% down payment structure. They may also need to qualify for a larger mortgage, absorb a higher monthly payment, and potentially face increased closing costs.
On a $20,000 increase, a buyer putting 20% down would need an extra $4,000 upfront and borrow an additional $16,000. At a 5% interest rate with a 25-year amortization, that additional borrowing is roughly $94 more per month. The number may not sound dramatic on its own, but it adds to property taxes, insurance, utilities, condo fees, and other expenses that are already stretching household budgets.
My market view
As a mortgage professional, I see rising lumber costs as another reminder that housing affordability is not only about interest rates. Lower rates can help buyers qualify, but they cannot solve supply disruptions, rising material costs, or a shortage of projects that make financial sense for builders.
Buyers should not rush into a new build simply because they expect costs to rise. However, they should understand that waiting for construction prices to fall dramatically is not always a reliable strategy — especially when supply-side pressures remain unpredictable.
What buyers can do
Build a contingency fund into your new-build budget for potential upgrades, closing adjustments, and unexpected costs.
Read the purchase agreement carefully, especially clauses related to price changes, delays, and occupancy.
Ask what is included in the base price and what costs could arise later.
Compare new construction with resale options in the same area; a resale home may offer more certainty around the final price and closing date.
Get a mortgage pre-approval that reflects your full carrying costs, not only the sticker price.
Thinking about buying a new build, comparing resale versus pre-construction, or preparing for a mortgage approval? Reach out to Mr. Mortgage today. Let’s build a financing strategy that leaves room for the real costs of homeownership.
Kechanth Kannan | Mr. Mortgage
Phone: +1 (647) 554-2718
Instagram: @_mrmortgage
