Lumber prices slipped deeper into a slumber this week.
The price of lumber dropped as low as $780 per thousand board feet on Monday, the lowest point for the commodity in 2022, Insider reported. Prices dropped as much as 6 percent on the day and 13 percent in the past week.
Year-to-date, lumber prices are down 30 percent.
The market is on a continued slide from last month, when it hit a then low for the year at $829 per thousand board feet. Rising mortgage rates and growing inflation were cited as factors behind the slip in lumber prices, and have only proven to be more persistent in the weeks since.
“We expect prices in the long term to be challenged with the affordability and rising interest rate headwinds,” Sherwood Lumber COO Kyle Little told Insider.
In March, lumber was trading for as much as $1,357 per thousand board feet. A year ago, lumber hit a peak of $1,733 per thousand board feet, more than double what it was trading for at Monday’s low mark.
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Rising mortgage rates and inflation have dampened demand and saddled homebuyers with higher costs. But the drop in lumber prices could be a boon to builders, who have been fighting a losing battle against supply chain delays since the onset of the pandemic.
In March, privately owned housing starts rose 3.9 percent year-over-year, according to a monthly report from the U.S. Census Bureau. The seasonally adjusted annual rate of 1.79 million housing starts was up marginally from February’s revised estimate. Single-family housing starts jumped 1.7 percent from the previous month.
Still, homebuilders don’t appear to be feeling confident.
The National Association of Home Builders/Wells Fargo Housing Market Index slid for the fourth month in a row in April, CNBC reported. The report cited lingering supply chain issues and rising mortgage rates as reasons for the diminishing sentiment.
[Insider] — Holden Walter-Warner