Lumber: still cheap after 60 years?

Your family is growing but the modest home you bought for the two of you and your first child isn't. When it comes to homes, one thing never changes: as a family grows it takes up space. Of course, moving to a larger house is an option, but will you and your kids like the new neighborhood, changing schools and finding new friends?

The children will no doubt be thrilled if you stay and add on. They might finally have their own rooms or a place to entertain, but you're trying to wrap your head around what all this might cost. And to make matters worse, your grandparents are swapping stories about how cheap it was in the '50s to add on to their post-war starter homes.

Is it true? How big of a bargain did grandma and grandpa get back in the day?

Framing lumber: part of every home addition

Regardless of what size a home addition might be or the year it's built, framing lumber is a significant part of the construction cost. The rough lumber, as it's also sometimes called, is used to form the entire skeleton of the new structure. While framing lumber varies by size and type, there are three components used in almost every home addition: 2-by-4s, floor decking, and roof sheathing. They were a part of additions during the 1950s, and they're still used for home expansions today.

Quantities can vary depending on the number of doors and windows and roof design, but a 12-by-26-foot home expansion that's large enough for 2 bedrooms and a small bath might require the following:

• 60 eight-foot 2-by-4s in the exterior walls
• 12 sheets of ½-inch floor decking
• 16 sheets of 5/8-inch roof sheathing

Most floor decking used today is ¾ inch, but during the 1950s ½-inch plywood was often installed as underlayment over dimensional lumber to create subfloors.

Framing lumber costs: then and now

So what would a homeowner during the 1950s pay for the lumber listed above? Kenneth Martin of Martin's Native Lumber in Dayton, Va. has been involved in the lumber industry since 1947. While prices can vary by region, he recalls selling 8-foot 2-by-4s for about 55 cents each during the 1950s. Martin sold ½-inch plywood for about $3.70 a sheet and 5/8-inch plywood for around $5.00 during the same time period. The total for the specified lumber needed for that 12-by-26-foot home addition: a little under $160.

How about today? Martin will sell you an eight-foot 2-by-4 for $2.79, a sheet of ½-inch plywood for $18.89, and 5/8-inch plywood for $21.39. The total for the addition's lumber at current prices: a little over $736. So like everything else, lumber prices have skyrocketed since the 1950s -- or have they?

Factoring in inflation to change those 1950 figures into 2013 dollars makes a big difference. Using 1955 as a starting year, that 55-cent 2-by-4 becomes $4.71 in 2013 dollars. The $3.70 sheet of ½-inch plywood is $31.70 in today's dollars and the 5/8-inch plywood jumps to $42.83. The total for that addition during the 1950s once inflation is factored in: about $1,352.

According to Martin, rough lumber is one building component that has stayed about the same in price or even decreased from what it was 60 years ago. In addition, modern technology has provided some budget-friendly options that weren't available to homeowners in the 1950s. OSB board, which is produced from wood scraps, can be substituted for plywood in many construction applications. OSB averages about $5.00 a sheet less than standard plywood roof sheathing and floor decking.

What can cause framing lumber prices to jump?

While framing lumber costs have remained fairly level since the 1950s, there are events that can cause prices to rise temporarily. Martin states that in a typical year costs can fluctuate by about 15 to 18 percent. Here are a few issues that can affect how much you can pay for rough lumber:

• Weather -- Severe storms such as hurricanes and tornadoes that damage homes and buildings can create a brief lumber shortage that results in higher prices. An article in the Wall Street Journal discusses how Superstorm Sandy caused lumber futures to jump by 5 percent.
• Oil prices -- At some point almost all rough lumber must be transported by trucks, even if it's just the delivery to your home -- as gas prices rise so can the cost of plywood and 2-by-4s. Martin feels the changing cost of fuel creates the largest variations.
• Demand -- A sudden upswing in residential construction can cause a shortage of rough lumber until mills are able to catch back up. The basic economic principle of supply and demand can mean higher prices. The highest prices Martin can recall were just before the housing bubble burst in 2007. He was selling ½-inch plywood for about $26.00 a sheet and eight-foot 2-by-4s were at almost $5.00 each.
• Insects -- An insect infestation can create havoc in the wood industry. An article in the Wall Street Journal relates the impact the mountain pine beetle could have on future lumber prices.

Are you feeling a little more confident now that you know you can tell gramps you're going to get a better deal than he did? Not so fast. Martin also said he believes that the number of mills that shut down permanently during the recent construction downturn may cause prices to start an upward trend as the housing market recovers. And SBC Magazine, a publication that serves the roof truss and floor joist industries, predicts that China's appetite for framing lumber could also cause prices to rise.

You might want to get started on the home addition sooner rather than later.