Why It Matters: Lumber prices saw a big jump during the pandemic as people moved, built houses, and renovated. Increased prices were then mixed with shortages as supply chain issues and inflation took hold. However, lumber — which is a type of wood prepared into pre-determined sizes — is at its lowest price in more than two years.

• Lumber prices are about one-third cheaper than they were one year ago. Prices peaked in March when the Federal Reserve started raising interest rates to curb inflation; the current price of $410.80 is down 70% from March.
• Lumber companies have relaxed. Builders report that cheaper wood is allowing them to offer incentives to buyers and "trim prices without crimping their profit margins" (The Wall Street Journal).
• Timing: Increased lumber costs contributed to home builders raising prices over the past two years. But the drop in lumber prices comes as the Federal Reserve has been increasing borrowing rates. An overall slowdown in home building is expected.
• Something to Consider: The consolidation of North American sawmills also impacts the market: “Markets are a little more controlled with fewer mill owners. When there were more owners, everyone waited for someone else to slow down,” Håkan Ekström of Wood Resources International LLC explained. 

For more about the U.S. housing market, check out our recent overview: A Roof Over Your Head (SmartHER News)

Lumber Prices Fall Back to Around Their Pre-Covid Levels (The Wall Street Journal)