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Thank the 2008 recession for rising Christmas tree prices today

Key Points
  • Christmas tree prices have been rising every year since 2015, according to an annual National Christmas Tree Association survey.
  • The jump in price reflects a return to more profitable pricing, as well as a shortfall of supply because farmers could not afford to plant as many seedlings during the economic downturn.
  • Artificial Christmas trees have seen an increase in sales as the prices of their real counterparts have increased.
Christmas trees are displayed inside a Home Depot store.
Emile Wamsteker | Bloomberg | Getty Images

Don't be surprised if there's a little sticker shock at the Christmas tree lot this year.

The price of Christmas trees is rising, indicating the industry is finally recovering from the Great Recession, which thrust it into a decade-long slump.

The National Christmas Tree Association survey conducted by Nielsen/Harris found that the average price about 2,000 respondents paid for a real tree in 2017 increased to $75, up 30 cents from the previous year's price tag. This year, prices will probably rise again, maybe as much as 5 to 10 percent in some areas, NCTA spokesman Doug Hundley said.

Between 2005 and 2015, the Christmas tree industry was not profitable for its growers, he told CNBC. A surplus of trees, combined with the financial crisis in 2008, meant that farmers struggled to sell all the trees they had, leading to discounts for customers.

Between 2015 and 2016, prices went up about 15 percent. The jump in price reflects a return to more profitable pricing, as well as a shortfall of supply.

During the economic downturn, farmers could not afford to plant as many seedlings. An evergreen conifer takes between 8 and 10 years to mature, so the impact of that decision was felt years later.

A resident of Manhattan's Upper West Side purchases a Christmas tree from a street vendor.
Angelo Merendino | Corbis | Getty Images

For the health of the industry, Hundley said, he hopes the rate of rising prices follows inflation more closely. Growers will have to tackle a few challenges to ensure supply stays in line with demand. Understanding demand for real trees can be difficult since it changes from year to year, and growers need to predict it so far in advance.

"We now have a good healthy balance between supply and demand," Hundley said. "We aren't going to have to throw trees away at the end of the year."

Climate change is affecting outputs in western states such as California, Oregon and Washington, according to Hundley. The increasingly dry conditions hurt seedlings, and the crop is not worth the effort of irrigation.

Rising prices helps explain why some consumers are buying artificial trees instead of the real deal. Results from the annual NCTA poll show that while 27.4 million trees were sold in 2016 and again in 2017, their fake counterparts saw sales in 2017 tick upwards from 18.6 million to 21.1 million.

The average price of fake trees is also rising, but they usually last between five and 10 Christmas seasons. In 2016, the average price for an artificial tree was $98.70, according to NCTA data. The following year, the price went up to $107 on average.