Columnists, Darren Satsky, V6I1

Lumber Prices Above Average

Photo courtesy of Kimberlee Kessler/

2020 is off to a strong start with builder confidence at a decade’s-high level. Building on strong mill order files and historically favorable lumber prices in Southern Pine and studs, the market has a much better outlook than a year ago.

 January and March lumber futures trade at a premium to cash prices, indicating the market is encouraged by the current supply/demand environment. 

Let’s examine deeper the positive factors, followed by our forecast. 


Builder confidence ended the year on a high note. The National Association of Builders Index (HMI) increased five points to 76, the highest reading since 1999. The index gauges builders’ perceptions of current single-family home sales and also asks builders to rate traffic of prospective buyers. 

Three factors are driving the optimism: low supply of existing homes, low mortgage rates, and a strong labor market. While many economists and builders expect the index to increase in coming months, the market is still under performing due to supply-side constraints like labor and land availability. Furthermore, development costs are hurting affordability. 


December lumber markets were mixed with Canadian SPF dimension leading the way, while SYP languished.  

Western SPF 2 by 4 dimension #2 & better prices were higher in the year-over-year period by about $70/mbf.  Eastern 2 by 4 Spruce moved up $53/mbf. SPF 8-foot stud prices increased $12/mbf year over year. 

SYP 2 by 4 prices reported marginal declines. Western 2 by 4 #2 SYP prices fell $18 mbf , while Eastern SYP dropped $39.   


While the Canadian SPF 2 by 4-dimension market looks expensive, a good alternative is the increase of imported products, or Euro, available to the market.  

If we look historically at the previous five-year average, today’s SPF lumber prices are above the previous five-year average and well ahead of prices last year at this time.  

The stud market has not kept pace with dimension lumber, and is running on par with historical averages. So, from a technical view, the best deals are studs and SYP.  

We would not be surprised to see a slight pull back in the SPF dimension lumber market, thus setting the stage for a bullish spring lumber market. 

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