After months of skyrocketing costs fueled by demand for new homes and countless DIY projects, lumber prices are finally falling. With the US economy opening up as the pandemic slows down, lumber prices are finally going down to more reasonable levels.
Why Is Lumber Expensive?
During the pandemic, the market witnessed wild price swings of construction-grade softwood lumber. Many Americans, inspired by lower interest rates, took the opportunity to buy new houses. Meanwhile, employees who usually stayed at the office suddenly found themselves at home throughout the day.
Armed with unusual free time, many embarked on DIY hobbies and renovation projects. This pushed the demand for wood products especially lumber. However, sawmills struggled to keep up with demand, Many workers had to stay home for fear of getting infected. When greater demand and lesser supply met, all hell broke loose.
The futures price of lumber in March 2020 was $303.40 per thousand board feet. 14 months later, that price grew more than five times. May recorded a high of $1,607.50 per thousand board feet.
Meanwhile, the Framing Lumber Composite Price, a real-time index of construction-wood prices, set the market price at $1,514. In addition, Federal Reserve chairman Jerome Powell admitted that lumber prices and shortages are one of the major causes of rising inflation.
By June, both futures price and the current price of lumber declined substantially into June, and industry experts say the lumber price hike is finally beginning to dwindle.
Why Are Lumber Prices Going Down?
According to fast markets analyst Dustin Jalbert, one of the reasons for the lower prices is the resurging sawmills. Many employees are now coming back to work so production increased.
In addition, Jalbert also said that as employees return to their desks, fewer people are working on DIY wood projects at home. “If you’re spending less time at home, you’re probably spending less money on the home. That remodeling, renovation, DIY boom — whatever you want to call it — that’s also softening,” he added.
In addition, Jalbert added with the coming winter months, demand for lumber can slow down further. The Framing Lumber Composite Price dropped to $1,113 last week, a decline of $211 from the week prior.
Meanwhile, lumber futures hit $904.90 over the weekend. It could take several weeks before price reductions can take effect in retail stores. However, he cautioned consumers to stay realistic. He said that “people should know that prices are probably not going to fall to the levels that they were before the pandemic.”
Watch the KTVB News report on lumber prices starting to come down:
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