It's a quick turn of events from the recent boom in house construction
Lumber rates have fallen by 50% as interest rates continue to soar across North America.
It has proven to be a quick turn of events considering that lumber prices were at an all-time high in 2021 as the pace of homebuilding was non-stop during the pandemic. Future prices for lumber have fallen to its cheapest level since September 2021 at $568.40 per 1,000 board feet in Chicago trading.
The Globe and Mail reported lumber prices began to dip in mid-March, plunging over 40% in the recent weeks. However, retailers said it might take four to six weeks before consumers notice any significant markdown in lumber prices.
However, some analysts predict that lumber prices won’t revert back to their pre-pandemic level of 2019. It is likely that many retailers still have leftover stock purchased at higher prices while producers are cautious about flooding the market.
Since the start of the pandemic, US home prices have increased by 42%, paving the way for more DIY projects among homeowners looking to repair or rebuild their houses. The price drop would likely encourage clients who had put building or renovation plans on hold to resume these projects.
Keta Kosman, owner of Madison’s Lumber Reporter, believes that after two years of market volatility the construction market might be finally heading towards a balance of supply and demand.
“Normally by this season the large home builders and construction companies have received the wood they ordered in February to April, so lumber prices naturally start to soften,” Kosman wrote in an article. “In addition, realtors and builders are noting that the seasonality we have all been used to over recent decades seems to be fading away, and that home buying and construction can be active at any time of year. Only the future will tell how this situation will unfold going forward.”