Picture provided by buildsteel.org.
Brief:
- The price of lumber for September delivery rose 3.1% to an all-time high of $641.60 per thousand board feet, the Wall Street Journal reported. The new high, a growth of $19 since last month, beats the previous high of $639, which was a result of a brief hike in 2018 from tariffs and forest fires.
- This spring, the price of lumber futures hit a four-year low as sawmills closed response to the pandemic. When they reopened, the price began to rise, and hasn’t stopped.
Insight:
Several factors have led to the price jump, according to the Wall Street Journal:
- An increase in residential construction including do-it-yourself projects like decks.
- Low mortgage rates that spurred residential construction and remodeling.
- The construction of outdoor seating and dining areas for restaurants across the country.
- Lumber mills that were unprepared for the surge in demand.
Confidence in the National Association of Home Builders/Wells Fargo Housing Market Index for new single-family homes leapt to 78 in August. Any score above 50 is considered a positive level of confidence in the market.
The current index is the highest it has been in 35 years, after dropping to a score of 30 in April. New home demand continues to be strong, but demand could lose momentum if lumber prices continue to rise.