Lumber Prices Are Rising Back Again
Lumber prices rose 5% to $1,024, returning to the $1,000 per thousand board feet mark for the first time since mid-June, as the commodity faces increased volatility due to supply chain concerns and solid demand from home builders.
The year 2021 was a turbulent one for the lumber industry.
Prices soared at $1,700 in May, then plummeted as much as 74% before bottoming out around $452 and regaining 127 percent to their present level.
The commodity is still down 41% from its recent peak and is only up 12% year to date.
Various floods in Canada, ongoing demand for homes in the United States, and a dwindling supply of single-family homes have all contributed to the volatility.
Since 2015, when it was about 1.25 million, the total inventory of single-family houses for sale in the United States has been progressively falling.
According to Altos Research, there are now just 350,483 single-family homes for sale in the United States.
The figure hit a low of 307,000 on April 30.
Record low interest rates, which means low mortgage rates that improve a borrower’s spending power, are driving demand for homes, as is an aging millennial demographic that is steadily moving from student debt to mortgage debt.
Nobody knows where lumber prices will go from here, but TradeStation’s David Russell believes volatility will return in the future.
“This is the aftershock of that huge earthquake,” Russell told Insider.
“After this, we will see the volatility decrease and things will start to stabilize.”