Lumber Prices See Largest Monthly Price Drop in History
After skyrocketing all spring, lumber prices fell back to Earth in June. Here's a look at what's happening and when things might stabilize.
After months of soaring highs, the price of lumber in the U.S. is finally coming down.
Lumber prices plummeted more than 40 percent in June to $710 per thousand board feet. According to CNBC, this marks the largest monthly drop in lumber prices on record. The price of wood has fallen drastically since hitting all-time highs in early May, and experts predict that this downward trend will continue throughout the back half of the year.
“I would not be surprised at all if we see the price continue to trail lower than $600 or below toward the year-end,” Mace McCain, president and managing director at Frost Investment Advisors, told Insider. “We will continue to see supply come on board but we will not see demand continue to grow.”
High demand for housing, more people doing DIY home renovations and low levels of lumber inventory drove up lumber prices in the spring, leading to bottlenecks in the supply chain. But as those factors gradually ease, prices should continue to drop, then stabilize at a more historically normal level.
“This drop suggests that the cause of that inflation — the mismatch of supply and demand — will not last forever,” Brad McMillan, CIO at Commonwealth Financial Network, told CNBC. “As suppliers across industries get their acts together, those shortages will fade, along with the inflation. That looks to be happening for lumber now and will happen for other inputs later.”
Despite this historic drop, representatives of the home building industry are still advocating for further federal action to combat high lumber prices. Earlier this week Chuck Fowke, chairman of the National Association of Home Builders, met with Republican members of Congress to recommend federally protected forests be opened to lumber production.
“We must strike a more appropriate balance in how we manage our national forests,” Fowke told lawmakers. “Doing so will restore the health of one of our great natural resources and offers the potential to reinvigorate the forestry industry while improving housing affordability. That’s a win-win-win in my book.”