Supply catching up with demand as sawmills get to work
In yet another twist in the saga of pandemic-era supply chains, the price of lumber is tumbling several weeks after costs soared. With sawmills back to producing close to what they did before COVID, availability of lumber is finally catching up to the demand for new construction that recovered faster as the U.S. began reopening. It’s another example of the fits and starts that come with essentially restarting an entire national economy.
Last week, the Framing Lumber Composite Price fell to $1,113, a decline of $211. Futures dropped to $904.90. While they will still likely stay higher than before the pandemic, lumber prices are now down to August 2020 levels.
“The rapid decline suggests a bubble that has burst, and the question is how low lumber prices will fall,” The Wall Street Journal reported. “Even after tumbling, lumber futures remain nearly three times what is typical for this time of year. Lumber producers and traders expect that prices will remain relatively high due to the strong housing market, but that the supply bottlenecks and frenzied buying that characterized the economy’s reopening and sent prices to multiples of the old all-time highs are winding down.”
Industry insiders project the volatility will remain for another year or two as conditions stabilize. There may be a few price spikes, but the general trend in lumber prices is downward. If that renovation on your house can wait a few months, you’ll probably save some cash by waiting. Even the lower prices now will take a few weeks to show up at hardware stores.