Printer Friendly

BUILDERS URGE SWIFT ACTION TO LOWER LUMBER PRICES

 PORTLAND, Ore., April 2 /PRNewswire/ -- Gridlock over federal forest management policies and court injunctions slowing or halting timber harvests in the Pacific Northwest have helped send lumber prices sky-high and have increased the cost of building a typical 2,000-square-foot home by about $5,000, according to the National Association of Home Builders (NAHB).
 In remarks prepared for delivery at today's Forest Conference, NAHB Vice President/Treasurer Jim Irvine said that prices for framing lumber have doubled in the past six months, increasing from $250 per 1,000 board-feet to more than $500 per 1,000 board-feet.
 Irvine, a home builder from the Portland area, added that the price increases -- and the uncertainty they cause -- are very serious problems for both builders and home buyers.
 "These rising lumber costs have added $5,000 to the cost of building a standard home and thousands of dollars to the cost of building a room addition or other major remodeling job," Irvine said. "Unless reversed, such an increase could knock more than 130,000 borderline buyers out of the market and ultimately could cost jobs in the housing sector and slow the pace of the current housing rebound."
 Irvine added that rapid lumber price increases have had a disruptive effect on the housing market that goes far beyond the immediate reaction to higher home prices.
 "Builders who contracted to deliver homes at fixed prices are now finding it difficult to fulfill their commitments because the prices do not cover their increased construction costs," he said. "Lumber dealers are now unable to quote prices more than a few days in advance, and even though builders are attempting to deal with the situation by putting escalation clauses in their contracts, buyers frequently are unable or unwilling to accept the risk of uncertain prices."
 Further, it has become difficult for both builders and buyers to get financing because property appraisals do not yet reflect the cost increases, Irvine said.
 Why Prices Have Soared
 The primary reason that lumber prices have soared is that fewer trees are available for harvesting in the national forests of the Pacific Northwest due to reduced sales and numerous problems associated with the environmental laws and policies governing U.S. owned timber, Irvine said. Contributing factors include panic buying, speculation, a 6.5 percent countervailing duty on Canadian lumber, tax incentives promoting log exports and disruptions at different levels of the production and distribution chain.
 He also pointed out that even though orders for lumber are rising as the recovery gathers momentum, increased demand for lumber has played a relatively minor role in the recent price explosion. "Considered in an historical context, this has been a very modest housing rebound and actual lumber consumption in 1992 was 45.3 billion board-feet, well below the peak of 50.5 billion board-feet used in 1987," Irvine said.
 Solutions
 To move forward on this issue, the federal government must develop rational and predictable environmental and forest management policies that recognize the need to protect the environment, endangered species and old growth forests as well as the equally strong need to protect jobs, promote afford able housing and meet the nation's lumber needs, Irvine added.
 "This conference is the perfect place for that process to begin and the nation's home builders are grateful to President Clinton for calling the conference and setting the wheels in motion."
 First, Irvine said, there must be an agreement on how much lumber can be cut in the Northwest. That will provide the market with the predictability that it now lacks.
 In addition, the Endangered Species Act should be reformed to provide balance in the nation's approach to species conservation, Irvine said. "Further, the new approach to species preservation recently suggested by Interior Secretary Bruce Babbitt is an interesting alternative and we look forward to working with the secretary as he develops this concept," Irvine said.
 The administration also should repeal the 6.5 percent countervailing duty on lumber imported from Canada, he said. "When lumber prices double in less than six months, it makes little sense for the government to discourage lumber imports from Canada, which provides about 30 percent of the lumber consumed annually in the U.S.
 "The government also should investigate the favorable tax treatment of log exports," Irvine said. "While NAHB opposes any attempt to impose trade barriers or restrict private property rights, we question whether those exports should be subsidized through tax incentives."
 He added that President Clinton should immediately direct the Forest Service to sell dead, down and dying timber located in national forests. "These trees can be used to produce valuable lumber and other wood products," Irvine said, "but only if they are harvested in a timely manner."
 Finally, Irvine urged President Clinton to make a clear commitment to end the legal logjam that has virtually halted stumpage sales, to take federal policy out of the courtroom, to make the supply of timber from government-owned forests adequate and predictable and to assure that the nation's home builders have the lumber they need to build homes for the American people.
 "Doing so will burst the speculative bubble in the lumber market and allow the recovery in home building and the overall economy to proceed," he concluded.
 -0- 4/2/93
 /CONTACT: Jay Shackford, 202-822-0406, or Cynthia Adcock, 202-822-0450, both of the National Association of Homebuilders/


CO: National Association of Home Builders ST: District of Columbia IN: CST SU:

KD -- DC029 -- 2584 04/02/93 14:35 EST
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Apr 2, 1993
Words:913
Previous Article:SYM-TEK SYSTEMS INC. EXTENDS BANK FINANCING
Next Article:DATA BROADCASTING CORPORATION ANNOUNCES REDEMPTION OF SERIES A SENIOR NOTES
Topics:


Related Articles
LUMBER PRICES NOT FAULT OF LUMBER RETAILERS
BUILDERS URGE ACTION ON ESCALATING LUMBER PRICES
BUILDERS CALL FOR ACTION TO LOWER LUMBER PRICES
SOARING LUMBER PRICES DRIVING UP HOUSING COSTS
NAHB RESPONDS TO WILDERNESS SOCIETY CHARGES
PRESIDENT CLINTON'S FOREST PLAN HAS FAILED, HOME BUILDERS SAY; UNBALANCED LUMBER PLAN HAS PRICES SKYROCKETING
LUMBER PRICES HIT ALL-TIME HIGH, ACCORDING TO RANDOM LENGTHS
INCREASING LUMBER PRICES SEVERELY AFFECT AFFORDABILITY, NAHB TELLS HOUSE BANKING COMMITTEE
HOME BUILDERS CALL ON PRESIDENT CLINTON TO REVISE CANADIAN LUMBER AGREEMENT
Skyrocketing lumber prices shaving contractors' profit margins: soaring prices stalling building sector.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters