Sioux Falls, SD (KSFY) This January Sioux Falls announced its 5th straight year of record breaking building permits in the city; but as people continue to build new homes and businesses, the price for those materials keeps going up.
“Right now it’s at record highs,” Schoeneman's Building Materials store manager Wade Smythe said.
The price of lumber in the U.S. has jumped roughly 20 percent since last year.
“A lot of it has to do with the Canadian market and the tariff the U.S. put on the lumber coming in from Canada,” Smythe said.
The Trump administration is moving forward with a proposed 20 percent tariff on all Canadian lumber, which is widely used in South Dakota.
“We probably use about 60 percent from Canada and 40 percent domestic, simply because the price is better than domestic, because our domestic has to come off the coast so really Canada is closer in many instances,” Scott’s Lumber General Manager Mark Kozel said.
“It’s a good grade of lumber, we like to have quality lumber so we’ll pay that price to keep that kind of lumber here too,” Smythe said of Canadian lumber.
“I prefer having lumber brought out of Canada, it has a little more density,” Sioux Falls home builder Dusty Rallis said.
But it’s not just the proposed Canadian tariff causing the spike in lumber prices.
“We've had major fires in the united states and also a major fire in Canada,” Kozel said. “Any time you have a supply and demand issue the price is going to go up.”
“You get fires, then you get mudslides, it takes out the rail lines and it’s harder to get it here, so a lot of factors can cause lumber to go up in price,” Smythe said.
“I don't think it’s going to slow down the overall housing market, but there are some areas that will be affected,” Rallis said.
Sioux Falls home builders say the price jump will impact some home prices.
“From a money aspect, lumber is not the largest aspect that goes into a home,” Rallis said.
Rallis says on average, the increased cost of lumber will add roughly $1,500 to $2,000 to the cost of new home constructions.
Despite that increased cost, city leaders in Sioux Falls say they expect to see another big year of new construction in Sioux Falls.
The National Association of Home Builders says the United States does not produce enough lumber to meet the growing demand for new homes and businesses. The organization would like the U. S. to rescind the Canadian tariff, boost domestic production, reduce U.S. lumber exports and seek out new lumber markets.