In 2020, the wood products industry was one of the few industries to escape COVID-19 with profits not just intact, but rising, thanks in part to home remodeling projects. Consumers spending more time at home focused mostly on outdoor projects this year, including decks, pergolas and porches, along with additions to add square footage to their residences. Houzz, the online home remodeling platform, reported a 58% annual increase in project leads for home professionals in June.
The year ahead is looking promising for the industry, too, as consumers start to plan indoor remodeling projects for spaces like kitchens and bathrooms. With more people working, cooking and eating at home, these spaces are more important than ever to family life. Plus, home prices continue to gain despite the economic downturn, boosting homeowners’ equity, which many are using to fund their projects. In a recent survey by remodeling platform Porch.com, more than three-quarters of respondents reported planning a remodeling project in 2021.
Many people are planning a DIY approach. Members of the National Kitchen & Bath Association are anticipating an increase in activity in 2021, which could further drive demand for lumber, plywood, OSB and engineered wood products. Lumber prices are heading back toward equilibrium after rising precipitously in 2020 due to a COVID-19-induced drop in supply just as demand was rising.
While prices are usually between $420 and $600 per 1000 board feet, this September they rose to $948, a peak that was always going to be unsustainable. As of October, they were back to about $580. Third quarter sales for mill owners, however, will likely set records, setting them up for a very strong finish to the year, according to the Wall Street Journal.
The supply chain is beginning to rebalance, which is good news for consumers. Lumber producers will catch up to demand over the winter, when projects usually slow down, making prices on the shelves at places like Home Depot more like what they were a year ago. Barring any major catastrophe, like extended shutdowns, remodeling projects large and small should take off again in early 2021. Check out the market forecasts for the year ahead and in the longer term, which are also looking good.