Lumber Futures Fall Fast as Supply Increases
A few weeks ago, lumber prices were at all-time highs, but after a significant drop, that’s no longer the case.
Before the COVID-19 pandemic, a thousand board feet of lumber cost about $500.
When the pandemic hit, that cost more than tripled to nearly $1,700 for a thousand board feet.
It was a combination of a shortage of supply and a big upsurge in demand.
Together, those factors meant lumber was so expensive that the Bank of America estimates the cost of a new home went up by $34,000.
But now, after months of climbing lumber prices, the upward trend has finally reversed.
Two weeks ago, lumber prices started falling.
Shane Schwingle, the retail general manager for Pukall Lumber, based out of Arbor Vitae, said the falling price of lumber is still a reflection of supply and demand.
“Demand is still strong, but supply is coming back so prices are dropping,” he said.
According to him, prices haven’t dropped much, just about $200 for a thousand board feet.
But it’s enough for people to pause on their building projects in hopes prices will keep going down.
Schwingle doesn’t know how much prices will drop or how fast it’ll happen.
They likely won’t go back to pre-Covid levels though.
“Lumber was so under-valued and under the market value for years,” he said. “Now it’s way over-inflated, I understand that. It’s going to drop, I’m going to say $800 to $900 a thousand [board feet] coming out of the mills.”
Schwingle said a slowdown in demand should lead to even lower prices, but the price drop won’t immediately impact consumers.
That’s because a drop in price from the sawmill doesn’t take into account the supply lumberyards already have in stock.
“It kind of takes time,” he said. “You see oil prices go down, that doesn’t mean gas instantly drops. It’s going to take a little bit before we can start lowering our prices.”
So for the sake of business, Schwingle hopes people pick up their projects again.