The price of lumber futures for July delivery opened Tuesday at $932.50 for one thousand board feet, and ended at $890.50 – down 4.5 percent for the day. This continued the recent downward trend in lumber prices, which peaked at $1733.50 on May 10.
The moderation is welcome news, especially for homebuilders and would-be new home buyers, as it signals a bit of a return to normalcy in a market that has experienced wide fluctuations in supply, demand and pricing since the onset of the Covid-19 pandemic.
One year ago, the price of one thousand board feet of lumber was roughly $400. Beginning in the third quarter of 2020, lumber’s price began a steady upward march. It ultimately more than quadrupled.
Cuts in production contributed to the historic price runup. At the onset of the pandemic, sawmills cut production in anticipation of a housing crash that never materialized. In fact, then spending more time at home than ever before, Americans sought to remodel their homes in record numbers and many looked to buy new homes, motivated by low mortgage interest rates. Exacerbating the situation, some builders and retailers reportedly hoarded their lumber supplies on hand, for fear of running out.
Producers and traders of lumber expect prices to remain high relative to historic norms due to exceptional strength of the housing market compounded by a shortfall in supply that traces to low levels of new-home construction following the 2008 housing crash. For perspective, The Federal Home Loan Mortgage Corporation (Freddie Mac) estimates that it would take nearly 4 million more houses to meet current demand.
New home construction actually contracted some since setting a 14-year high in March, as builders pulled back, spooked by the sharp increase in the price of lumber. But loggers and sawmills have ramped up production, hoping to take advantage of high prices.
This homebuilding and home remodeling news update is presented by the Butcher Block Co. – an online store specializing in butcher block and plank countertops https://butcherblockco.com/counter-top in sixteen different wood species for home kitchens, restaurants and other commercial enterprises.
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