Leaders.com
  • Business
  • Leadership
  • Wealth
  • Master Classes
  • Business
    • Entrepreneurs
    • Executives
    • Marketing and Sales
    • Social Media
    • Innovation
    • Women in Business
  • Leadership
    • Personal Growth
    • Company Culture
    • Public Speaking
    • Productivity
    • Hiring
    • Social Issues
    • Leaders
  • Wealth
    • Investing
    • Cryptocurrency
    • Retirement
    • Venture Capital
    • Loans and Borrowing
    • Taxes
    • Markets
    • Real Estate
  • Master Classes
Markets

Lumber prices have dropped over the past year (Angelika Warmuth/picture alliance via Getty Images)

By Tyler Hummel Leaders Staff

Tyler Hummel

Tyler Hummel

Tyler Hummel is a news writer for Leaders Media. He was the Fall 2021 College Fix Fellow and Health Care...

Full bio


Learn about our editorial policy

Jun 2, 2023

The Dangers Of Falling Lumber Prices 

Lumber is currently in a bear market, declining 75.8% in value since early last year, but it might not indicate the fate of the real-estate market or the economy. 

Key Details

  • Morgan Stanley strategist Lisa Shalett recently warned that the housing market could face a crisis worse than 2008—seeing values precipitously drop 40%. 
  • “Commercial real estate is melting down fast. Home values next,” tweeted Tesla CEO Elon Musk on Monday. 
  • In a recent episode of Money Making With Matt McCall, Stansberry Research’s Matt McCall hosted a conversation with portfolio manager and The Lead-Lag Report writer Michael Gayed. 
  • Gayed warns that Lumber prices indicate imminent economic troubles, stating that Lumber is a key economic indicator that precedes changes in the housing market and new home construction. 
  • McCall disagreed, arguing that “while lumber may have been an indicator in the past, it hasn’t been the most reliable recently.” 

Why It’s News 

Gayed is not the first analyst to predict imminent doom for the economy. High inflation and high interest rates have resulted in widespread predictions that the U.S. economy will descend into a recession within the coming months, in addition to facing the negative effects of ongoing housing shortages. The recent regional banking crisis reflected the ongoing effects of the federal government’s monetary tightening policies having negative effects. 

There is a connection between lumber’s weakness and the performance of real estate and small-cap companies worth less than $2 billion due to the immediate effects caused by increased construction prices. “Lumber leads the housing market by four or five months, meaning if lumber picked up, you would see the current data reflecting the prior weakness,” says Gayed.  

Lumber’s value is continuing to weaken, and predictions for the imminent state of the housing market are trending negative. But a soft landing is not beyond the realm of possibility. With the Federal Reserve slowing its interest-rate hikes, market volatility is expected to cool off. As Stansberry’s McCall notes, some housing ETFs are seeing 15-month highs, reflecting a housing market moving in the opposite direction of construction costs. Demand for housing is not decreasing. 

“I have not seen any evidence that homebuilder stocks are predictive of housing. That said, lumber prices don’t make sense. Lumber is a key commodity in new home construction, and homeowner stocks are acting like they’re in a bull market for housing,” says Gayed, who argues that latent COVID-19 anxiety could be contributing to high consumer spending.  

This year has been an unusual one for the market, with strange differentials between growth and value and stocks appearing to overcorrect in spite of headline averages. Part of the housing market’s behavior can be attributed to the evolving market, with shortages caused by companies buying properties to convert them into AirBNBs or rental properties—using them as income-generating assets. With demand holding, housing construction may not be a negative indicator for the housing market.  

“Not being dramatic about this, but even I’m surprised at how poorly Lumber continues to perform. There is a clear disconnect between homebuilder stocks and Lumber. Lumber has predictive power in housing. I have yet to see homebuilder stocks have predictive power,” Gayed continues. 

Home / News / The Dangers Of Falling Lumber Prices 
Share
FacebookTweetEmailLinkedIn

Related Stories

Seattle Takes The Crown For Advanced Tech Talent

by PJ Howland Leaders Staff
Tech

Oct 24, 2023

Seattle tech talent

Seattle has emerged as the metro area with the most advanced tech talent, beating out tech hubs like San Francisco and Silicon Valley.

Key Details

  • According to a new ranking by the Burning Glass Institute, Seattle has the highest proportion of advanced tech workers compared to other cities with similarly sized tech workforces.
  • The ranking evaluated 60 million high-paying, in-demand tech job postings and histories to identify cities with cutting-edge roles like AI and cybersecurity rather than legacy tech positions.
  • With tech giants Amazon and Microsoft headquartered in Seattle, the city edged out the San Francisco Bay Area, Boston, Austin, and Raleigh on the list.
  • The report found that demand for software developers and IT support specialists has declined over the past five years as companies seek more specialized tech talent.

Go deeper

FacebookTweetEmailLinkedIn

More Americans Can’t Keep Up With Car Payments

by Colin Baker Leaders Staff
Loans and Borrowing

Oct 23, 2023

car loans, used cars

A record number of Americans are behind on their car loan payments as higher interest rates and prices weigh on consumers.

Key Details

  • According to data from Fitch Ratings, 6.11% of car loans were at least 60 days delinquent in September, the highest since tracking began in the early 2000s.
  • Some interest rates on used cars can rise to as much as 21%, according to Bankrate.
  • Soaring prices and rising interest rates are squeezing consumers, making it difficult for some to keep up with their auto loans.

Go deeper

FacebookTweetEmailLinkedIn

Chevron Makes $53 Billion Deal Amid Surging Gas Prices

by PJ Howland Leaders Staff
Markets

Oct 23, 2023

Chevron Gas Deal

Chevron is acquiring Hess Corp. for $53 billion, the second significant oil producer acquisition this month as crude prices climb.

Key Details

  • Chevron is purchasing Hess in an all-cash deal worth $53 billion, including debt and preferred stock redemption.
  • This comes just weeks after ExxonMobil announced its $59.5 billion purchase of Pioneer Natural Resources.
  • With oil over $80 per barrel, major producers are using their windfall profits to acquire smaller players and boost payouts to shareholders.
  • Chevron expects the deal to close in H1 2023 pending regulatory approvals and Hess shareholder vote.
  • Hess CEO John Hess will join Chevron's board once the acquisition is complete.

Go deeper

FacebookTweetEmailLinkedIn
nike logo
Company Culture

Oct 20, 2023

Nike to Require More In-Office Days From Employees

by Colin Baker Leaders Staff
blue collar workers
Retirement

Oct 20, 2023

Explaining The ‘C+ Grade’ Retirement Ecosystem in The United States

by PJ Howland Leaders Staff
netflix building
Entertainment

Oct 19, 2023

Netflix Hiking Prices While Adding Millions of Subscribers

by Colin Baker Leaders Staff

Recent Articles

Hiring

Nov 1, 2023

Learn the Winning Answers to the Most Common Phone Interview Questions

Come to your next phone interview fully prepared

Personal Growth

Oct 30, 2023

85 Quotes on Self-Love to Boost Your Self-Esteem

Don’t fall into the trap of harsh self-criticism

Company Culture

Oct 27, 2023

What is a Sabbatical? Your Ticket to Restful Growth and Meaning

Sabbaticals can benefits both employees and businesses

  • Business
  • Leadership
  • Wealth
Join the Leaders Community

Get exclusive tools and resources you need to grow as a leader and scale a purpose-driven business.

Subscribing indicates your consent to our Terms & Conditions and Privacy Policy

Leaders.com
  • Privacy Policy
  • About
  • Careers
  • Cookie Policy
  • Terms
  • Disclosures
  • Editorial Policy
  • Member Login

© 2025 Leaders.com - All rights reserved.

Search Leaders.com