After the precipitous drop over the summer, most lumber prices approached historical norms. Much of the demand and supply imbalances have corrected and the lumber market has stabilized for now.
ECONOMIC FACTORS
The housing market softened in July as construction continued to be hampered by labor and building material shortages.
Housing starts fell 7 percent to 1.534 million starts but permits rose.
The Federal Reserve raised its expectation for inflation and brought forward the timeline on when it will next raise interest rates. As of now, they did not change the short-term borrowing rate.
LUMBER PRICES
More than adequate lumber supplies in the distribution system pushed down prices of SPF, while SYP changed modestly.
Lumber imports surged to the highest levels in many years, compensating for any lumber supply shortages.
SYP 2 by 4 #2 prices increased by about 3 percent from the previous three weeks. Domestic Eastern and Western SPF 2 by 4 #2 and better prices declined 25 percent in the same period.
Premium spruce dimension grades fell with the drop in domestic #2 prices. Premium stud prices decreased.
STRATEGIES
We may have seen the end of sudden and dramatic price swings. If more people get back to work and additional unemployment benefits expire, markets will trade in more predictable ways.
Some supply shortages may persist near term, but the economy looks resilient. It should feel less risky to make purchasing decisions after the current price decline. If you have any questions about the market or your strategy, you can always reach me at my contact information.
