Lumber Market Report, News, V6I6

Some Lumber Price Relief

(Photo courtesy of Svilen Milev from

After several months of extreme imbalances and higher prices, lumber prices receded during September and October.  

Mill producers of Southern Yellow Pine and Spruce Pine Fir, the main species of softwood building material, finally supplied and surpassed what seemed like insatiable demand begun in the spring of 2020. 

The problem of historically high prices was by nature the remedy for the radical imbalance in the marketplace. Lumber mills were incentivized to produce as much as possible for the outsized return they were getting. 

Furthermore, buyers’ construction jobs, no longer as profitable due to higher input costs, held back purchases. 


The Federal Reserve Bank kept interest rates near zero to mitigate the adverse effects of the COVID-19-induced economic recession. 

Many economists continued to point to the housing market to lead the United States out of recession in 2021. New Housing Starts were a positive data point in September with starts up over 11.1% and permits up 8.5% year over year.  

According to the National Association of Home Builders, the pace of single-family starts was the highest production rate since the summer of 2007. Many builders started more homes to meet pent-up demand supported by low interest rates, a suburban shift to more space, and demographic tailwinds.  


Slower lumber demand and overwhelming supplies at mills and the distribution system drove prices lower by the end of October. 

SYP 2 by 4 #2 prices were 6 percent lower in the previous three weeks ending October 16. Canadian Western and Eastern SPF 2 by 4 #2 and better prices lost over $230 per thousand board feet in the same period. Premium grades in both species moved in sympathy with #2 prices. 

Studs prices dropped more than 25 percent following weak demand from home centers and do-it-yourselfers. 


While most lumber prices looked insanely expensive back in August, the recent price drops just added to the turmoil and volatility. A positive outlook based on strong data from the September housing permits should put a floor to the market. 

Uneven mill supplies, freight concerns, and strong housing prospects will continue to complicate buying decisions. Low interest rates and possibly more fiscal stimulus will likely keep all market participants on their toes. 

Leave a Comment

Your email address will not be published. Required fields are marked *


Current Issue

June/July 2024