The real estate market has soared in recent months as the desire to leave crowded cities and an increase in remote work caused a mass exodus to suburbia. However, the market seems to be at a standstill now due to labour and supply shortages.
Both Canada and the U.S. released housing data this week, and both fell short. In Canada, existing home sales fell 12.5%, while new home listings decreased by 5.4%. To the south, U.S. housing starts disappointed, with single family homes down over 13%.
In the U.S., the reason for the drop was due to higher costs as lumber prices have doubled over the past year. In the early days of the pandemic, lumber suppliers cut back production due to the uncertainty of the virus. Due to this shortage, the spike in building material has caused the average price of a new single-family home to increase by more than $24,000 since this time last year, according to the National Association of Home Builders. Lumber prices surged 89.7% on a year-on-year basis in April, according to the latest producer price data.
Another reason for the shortage: an ongoing softwood dispute between the U.S. and Canada. Since 1982, the countries have been at odds over the lumber, which comprises the majority of what the US does not produce. Canada again raised tariffs on imported lumber in April.