If you haven't been involved in building or remodeling your home, you may not have noticed this, but the price of wood has been on quite a tear. Lumber prices have surged more than 50% overall in the past year, while wood panel prices have increased more than twofold, nearing record levels.

Frequent patrons of Home Depot (NYSE:HD) and other lumber purveyors will have noticed prices going up, up, up in the past year. This means that the addition or deck you wanted to build on your house is going to cost a good bit more than you might have been told last year.

What's driving these increases? In part, it's strong demand from busy homebuilders, such as Toll Brothers (NYSE:TOL), Centex (NYSE:CTX), Lennar (NYSE:LEN), Pulte (NYSE:PHM), KB Home (NYSE:KBH), D.R. Horton (NYSE:DHI), and HovnanianEnterprises (NYSE:HOV), as the housing boom keeps booming. Whereas some 1.1 million new residential homes were built in 1993, 1.36 million were built in 2002 and an impressive 1.85 million in 2003.

New home construction aside, even remodeling has been booming. Americans spent some $130 billion in 2003 on remodeling, up from $105 billion in 2000.

The rising price of lumber has helped boost earnings at timber enterprises such as Weyerhaeuser (NYSE:WY), International Paper (NYSE:IP), and Georgia-Pacific (NYSE:GP).

A CBS MarketWatch article notes that as homebuilders have acquired each other and consolidated, they've been able to command better terms from suppliers -- while we individual homeowners have not: "Building-products retailers were able to boost margins on products sold to homeowners by 1.6 percentage points, to 24.2%, from 1997 to 2002. But the margin increase on sales to homebuilders was just half that at 0.8 percentage points, to 16.5%."

Indeed, even the home-improvement retailers have consolidated. In 2002, the 50 largest businesses took in 48% of total sales, while the four largest generated 36%. The two largest dealers alone -- Home Depot and Lowe's (NYSE:LOW) -- raked in nearly $85 billion in 2002, accounting for 32% of total market revenue.

The upshot is that as long as lumber prices keep rising, forest-related companies will likely continue to benefit -- unless they rise to levels where demand drops. Meanwhile, we homeowners contemplating improvements involving lumber would be smart to boost our cost estimates considerably, factoring in expected continued increases in the cost of wood.

For much more information and advice on building, remodeling, or maintaining your home, drop by our discussion board dedicated to that topic. We've got hundreds of boards on scads of topics -- check them all out free for a month! For guidance on homebuying, visit our Home Center.

Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.