After two years of high prices, lumber is coming back down to pre-pandemic levels.
Key Details
- Since the Fed began raising interest rates, the price of lumber has been declining, reaching the lowest level in two years.
- Lower pricing on lumber means that builders are able to find some breathing room in their pricing, offering discounts to homebuyers.
- Slowing construction is driving the drop in price as fewer buyers are able to purchase new construction homes. With the dropping demand, builders are no longer holding onto a cache of lumber.
- Panic buying of lumber has also decreased as shipping concerns have lessened.
Why it’s news
Immediately following the COVID-19 shutdowns, prices on lumber plummeted as construction came to a standstill, but once homeowners started COVID improvement projects lumber prices increased. Two-by-fours tripled in price.
However, as interest rates have risen, the price on lumber has fallen. Construction has slowed as fewer buyers are able to purchase new construction homes and fewer existing home owners start projects.
Access to lumber has also improved as supply chain issues have been resolved. Before, lumber yards and builders were secreting away staches of lumber, fearing they would run out. Now, that’s not as much of a concern.
Last week wood-pricing service Random Lengths says its cash sales on framing-lumber were down 60% from the beginning of March.
Executives at the World Forestry Center conference in Portland warned that the lumber industry should prepare for recession, though it is not expected to be significant.
Some natural events such as forest fires and beetle infestations may reduce the availability of lumber somewhat into the coming year. Wood prices are expected to be higher than typical during a period of recession.
