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Washington, DC — With the housing market showing signs of cooling and lumber costs edging downward as demand eases, American home buyers “will be forced to pay a premium” for lumber if a tentative managed trade agreement between the U.S. and Canada goes into effect in the coming months, according to the National Association of Home Builders. The Washington, DC-based NAHB last month criticized the proposed trade pact, stating that trade barriers, if enacted, would adversely impact housing affordability “by artificially boosting lumber prices during periods of normal or low demand.”
The result, said the NAHB, could have an adverse affect on housing starts, resulting in a slowdown in sales of kitchen and bath product aimed at the new- construction market.
In addition to higher home prices resulting from export taxes, the agreement “would also lead to market disruptions as Canadian mills accelerate or withhold shipments in anticipation of changes in quotas or fees,” the NAHB said.
Under the proposed accord, taxes on Canadian lumber shipments into the U.S. would move progressively higher once the price drops below the following thresholds: $355, $335 or $315 per thousand board feet.
The price of lumber was $377 per thousand board feet when the pact was announced in April, and has since fallen to $364 as supplies have increased and demand has fallen. If the settlement is enacted and results in new trade barriers limiting Canadian lumber shipments into the U.S., the association said it would help builders seek lumber sources from countries such as Germany, Sweden and Russia, each of which has significantly increased lumber shipments to the U.S. recently. The NAHB is also promoting the use of steel and other alternative building materials wherever practical.
“If this agreement goes into effect and the housing market continues to gradually cool down, U.S. lumber consumers would essentially be paying taxes to support the Canadian provinces and higher prices because of quotas,” Howard observed. “In short, this is one bad deal for American housing consumers.”