Connect with us

Hi, what are you looking for?

Business

Lumber prices finally tumble after reaching historic highs

The price of U.S. lumber has started falling back to Earth after reaching a peak of $1,711.20 in early May.

Many homes in the U.S. are built using Canadian softwood lumber. — Photo: Jaksmata via Wikimedia (CC BY-SA 3.0)
Many homes in the U.S. are built using Canadian softwood lumber. — Photo: Jaksmata via Wikimedia (CC BY-SA 3.0)

The price of U.S. lumber has started falling back to Earth after reaching a peak of $1,711.20 in early May – with futures for July delivery coming in at $1,009.90 per thousand board feet last week, a 41 percent drop.

FOX Business explains that the price of lumber soared at the beginning of the COVID-19 pandemic as strong demand for building supplies created a bottleneck in the supply chain, including both home improvement and construction, as the ability to work from home led to the need for bigger houses.

The Wall Street Journal suggests it now appears “a bubble … has burst,” perhaps indicating the record highs were just “temporary shocks,” and not the start of a “period of runaway inflation.”

And while the price of lumber, overall, is still 139 percent above pre-pandemic price levels, some experts, like Drew Horter, president and CIO of Tactical Fund Advisors, welcomed the downturn. He said lumber may tumble even further – to $600 per thousand board feet in the next six months.

“You can’t keep building at this pace,” he said, according to Business Insider. “There is also a domino effect to a certain extent.”

The sharp rise in lumber prices added about $36,000 to the cost of a new home, according to the National Association of Home Builders. And this spike was at least partially responsible for the sharper than expected 9.5 percent decline in housing starts in April.

And, we can expect the price of lumber to fluctuate as it reacts to supply and demand issues and commodity issues on the market. Experts are saying commodities in general typically spike when inflation is accelerating and is a good barometer of wider forces in the economy.

Federal Reserve chair Jerome Powell on Wednesday cited the falling price of lumber to back up the central bank’s claim that inflation will be temporary.

Written By

Karen Graham is Digital Journal's Editor-at-Large for environmental news. Karen's view of what is happening in our world is colored by her love of history and how the past influences events taking place today. Her belief in man's part in the care of the planet and our environment has led her to focus on the need for action in dealing with climate change. It was said by Geoffrey C. Ward, "Journalism is merely history's first draft." Everyone who writes about what is happening today is indeed, writing a small part of our history.

You may also like:

Tech & Science

High temperatures in the Arctic are melting Greenland's ice sheets rapidly.

Life

Florida hospitals reported more than 8,900 patients with COVID-19 on Thursday, according to data from the U.S. Department of Health and Human Services.

World

China’s worst surge of coronavirus infections in months spread to two more areas - Copyright AFP STRLaurie CHENMushrooming outbreaks of the highly contagious Delta...

World

China's worst coronavirus outbreak in months has spread to two more parts of the country, health authorities said Saturday.