By Joseph Chalfant
Lumber prices are falling fast from a record-high earlier this year.
Cash prices for lumber, month-to-month lumber futures, and expectations for the lumber market are all sharply declining.
For 14 out of the last 16 trading days, the price of lumber futures has decreased. According to the Wall Street Journal, on June 15, July futures fell to $1,009.90 per thousand feet, a shift of 41% from May’s record-breaking $1,711.20.
On June 7, cash prices started at $1,446 and dropped to $1,324 by the end of the week. Over the weekend and through June 14, prices further fell to $1,210, according to the Wall Street Journal. That amounts to a total drop of 16% in just over a week.
While short-term futures are falling rapidly, year-out expectations for lumber prices from suppliers are moving more slowly. According to the Wall Street Journal, PotlatchDeltic believes that prices may hover around $700 to $800 through 2022, still trading above the previous record of $639.
Chief Operating Officer of Sherwood Lumber Kyle Little warned that prices would not return to normal for a while.
“Based on our analysis, we believe we are midway through the cycle and lumber as a whole is going to trade at more than double its historical norms for the foreseeable future,” Little told Fox News. “We might have passed the peak so to speak, however, we will trade at a really, really high range for the remainder of this year-end well into 2022.”
Many have been worried that inflated prices could burst the red-hot housing market as increasing costs could slow construction and renovations. The rapid growth of the housing market amid the pandemic has been one of the primary driving factors in lumber’s hyperinflation. Inflated prices and material scarcity is beginning to slow housing completion.
The U.S. Department of Commerce reported on June 16 that permits for home construction, home completions, and homes with authorized permits that have not begun construction have all rapidly declined since December of 2020. Reuters further reported that authorized non-completed homes were at their highest levels since 1999.
Prices for other hot commodities are facing an unknown future. Federal Reserve Chairman Jerome Powell announced during a press conference on June 16 that the economy may see higher than expected inflation as rapid shifts in demand and supply-chain bottlenecks are exacerbated by a limited workforce as the pandemic ends.
