The roller coaster ride that is lumber is still going strong.
In the past month, the price of lumber futures has soared nearly 40 percent to $672.50 per thousand board feet, near a pre-pandemic high. The present cost is also seeing gains, as Random Lengths reports a 27 percent increase in an index that tracks immediate sales, according to the Wall Street Journal.
Lumber futures are a tick above where they were a year ago, but well above the average from 2015 to 2019, when they hovered right below $400 per thousand board feet.
As supply struggles to keep pace with demand, it’s not clear how rising prices will affect homebuilding, or whether the price of lumber will continue to surge through the rest of the year. Housing starts rose overall in August, but housing starts for single-property homes fell below expectations.
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Construction
New York
August housing starts rose but single-family properties fell short
Residential
New York
Homebuilders finally get a break on material costs
A number of factors have inhibited builders from matching the pandemic-fueled demand for fresh homes. Labor shortages and supply chain delays are part of the story. So are rising supply costs: The volatility of lumber has caused all sorts of headaches for the market, which peaked with futures above $1,700 per thousand board feet in the spring, the Journal reported.
Since then, there have been several intriguing developments on the lumber front. A survey revealed that nearly half of lumber dealers and manufacturers built up an excess supply of the material in July and no suppliers had “very tight” inventories.
Additionally, lumber prices seemed to be leveling off in the summer. In mid-August, lumber futures were trading about 70 percent below the May high.
The market remains uncertain, however, as material prices linger above pre-pandemic levels. Fires also forced lumber production cuts in British Columbia, causing impacts across the industry, according to the publication.
[WSJ] — Holden Walter-Warner