Sunday, May 2, 2021

Lumber Prices Predicted to Escalate for Next Several Months

There is no sigh of relief anytime soon for the off-site construction industry as Fortune predicts lumber will continue to climb in price.

Lumber prices are up 232% and ‘could spiral out of control in the next few months. Last week the price per thousand board feet of lumber soared to an all-time high of $1,188, according to Random Lengths. Since the onset of the pandemic, lumber has shot up a whopping 232%.

Homebuilders and Modular factories won't want to hear this, but the ceiling could be higher—maybe even a lot higher. On Monday, the May futures contract price per thousand board feet of two-by-fours jumped $48 to $1,420. That squeeze once again triggered the circuit breakers and caused lumber trading to halt for the day. Why would lumber yards and builders pay above-market rates? Severe lumber scarcity has buyers on edge. They're buying the sky-high contracts in order to ensure they'll actually get the lumber they need for projects already under contract.

This supply and demand mismatch is largely a result of the pandemic. At the same time that state-mandated lockdowns caused mills to halt production, bored quarantining Americans were rushing to Home Depot and Lowe’s to buy up materials for do-it-yourself projects. That caused lumber inventory to plummet. It only got worse from there: Recession-induced record-low interest rates caused a housing boom. In March, new housing starts hit their highest levels since 2006. Of course, new homes require a lot of lumber, thus exacerbating the shortage.

CLICK HERE to read the entire FORTUNE article


Gary Fleisher is the Managing Director and contributor to the Modcoach Network and its affiliated blogs. Email at modcoach@gmail.com

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