Why Are Home Prices Soaring?

Source: WSJ

One reason is a tariff on Canadian lumber that Biden can kill.

Housing prices are climbing across the country, and the cause is more than soaring demand. One overlooked culprit is a lumber shortage made worse by a U.S. tariff on imports from Canada.

The U.S and Canada had a softwood lumber agreement to manage prices with quotas from 2006-2015. When it expired, U.S. lumber producers filed antidumping and countervailing duty complaints. They claim Canada unfairly subsidizes and dumps lumber in the U.S., though in cases Canada has taken to the World Trade Organization the U.S. has rarely won. The Trump Commerce Department imposed the tariff in 2017.

The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in metro areas, was up 11.2% in the 12 months through January, the highest year-over-year price move in 15 years. Increased demand is part of the story as millennials start families, Americans flee cities, and interest rates remain low.

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