The price of many wood products has been going through the roof lately with some of them up over 300 percent this year.

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Huge price spikes started happening right after the United States started dropping bombs in Iraq.

When the war started, our government made a massive purchase of OSB (oriented strand board) and plywood.

The wood industry and contractors have been dealing with sky high prices ever since.

The material everyone wants is called OSB, and it's usually less than half the price of plywood. But not anymore.

In January, OSB was $6.75 a sheet and currently it's at almost $19. That's actually down from a record high $23 a sheet a few weeks ago.

Plywood also shot up from $12 to $24.

In 40 years of operating a Seattle lumberyard, Jack Olson says he's never experienced something like this, which caught virtually everyone off guard.

When the bombs started falling in Iraq, our government purchased about 25 million square feet of plywood and OSB. They've been using it to build barracks and temporary quarters for troops.

This big Iraq purchase came at a bad time.

Wood supplies were already running low because new construction starts have been way up across the country, sparked by low interest rates.

Contractors say the spike in wood prices has increased the cost of building a new home by several thousand dollars.

Olson points out that lumber and plywood markets do run up and down all the time, but nothing like what's happening this year.

Most current housing contracts have not been adjusted to the increased lumber costs. It's really starting to eat into the profits of homebuilders.

Some contractors say they won't be starting any new housing projects until lumber prices come back down.