Lumber prices plunge 28% in three weeks as housing market cools
What is it?
The price of lumber has refrained from inflating more in recent weeks.
“Lumber futures have dropped 28% from their early March high of $1,357 per 1,000 board feet, as new home sales fell for the second straight month in February, missing forecasts.”*
“’The price decline is tied to the DIY [do-it-yourself] sector slowing down due to high lumber prices, with people spending their money on other things like travel,’ Russ Taylor, president of Russ Taylor Global in Vancouver, told Bloomberg.”*
Why does it matter?
Lumber is a commodity that has seen tremendous price growth over the last couple of years. Many factors which have caused the prices to inflate like shipping delays may be subsiding.
“Wood prices have been volatile since the start of COVID-19, hitting record highs as a result of a pandemic inspired building boom, then collapsing as sawmills ramped up production and high prices hurt demand.”*
“Flooding in British Columbia disrupted lumber supplies and lifted prices in late 2021, and volumes that were stuck at mills in western Canada will move more quickly in better spring weather, resulting in more supplies in the market after months of tight inventories, Taylor said.”
Another reason this matters to you is the effect it may have on the housing market. The cost to build new houses will have major implications on the new building contracts which are a leading indicator of home sales. Inflation may be a key determinant of where the housing market is likely to end up over the next quarter. Like many people’s budgets, housing is one of the largest parts of the economy and it has a lasting impact on the people that are paying for it.
Other articles we found interesting this week:
5-year and 30-year Treasury yields invert for the first time since 2006, fueling recession fears
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Sources:
*Carl Surran. “Lumber prices plunge 28% in three weeks as housing market cools”. Seeking Alpha. https://seekingalpha.com/amp/news/3817773-lumber-prices-plunge-28-in-three-weeks-as-housing-market-cools
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