Economic news

Lumber Prices Dive more than 40% in June

The great lumber bubble of 2021 has popped. After a jaw-dropping rally this spring, lumber prices have come back down to earth as supply increased, speculative trading action cooled and homebuilding demand eased. Lumber futures have tanked 42% in June alone, on pace for its worst month on record back to 1978. The building commodity is down more than 13% in 2021, headed for the first negative first half since 2015.

At its peak on May 7, lumber prices hit an all-time high of $1,670.50 per thousand board feet, which was over six times higher than its pandemic low in April 2020. The quick reversal of lumber’s months-long rally came as Americans started to go on vacations again amid the economic reopening instead of taking on renovation and building projects. Many who are fearful of persistent inflation also took comfort in the drastic decline in prices in the face of cooling demand.

Goldman Sachs analysts said Tuesday their channel checks suggested increasing consumer hesitancy around some home improvement projects given sticker shock from the rapid rise in certain commodity prices this year, notably lumber. Earlier this year, lumber prices exploded due to a combination of reduced supply amid mills shutdowns and surging demand for new and improved homes. At one point, the lumber shortage led to the average price of a new single-family home to increase by nearly $36,000, according to the National Association of Home Builders.

The red-hot housing market also saw a record shortage of existing homes available. In April, about 1 in 4 homes for sale were newly built, the highest share ever. Historically new homes make up about 1 in 10.

Source: FXPro

To leave a comment you must or Join us

More news

Back to economic news list

By visiting our website and services, you agree to the conditions of use of cookies. Learn more
I agree