Drop Good News for Builders, It’s Looking Like Lumber Prices Are Beginning To Drop

“The best time to plant a tree was 20 years ago. The second best time is now.” Well, a tree planted 20 years ago could be today’s highly sought-after raw material (2021).

Lumber prices reached historic rates during the first quarter of this year and are finally starting to drop below $1000. That’s almost 40% lower than its peak back in May 2021. Yet still, the National Association of Home Builders says the price tripled in just 12 months. Builders are finally starting to see a light at the end of the tunnel. After over a year of instability and labor shortage caused by the pandemic, it will take time to return to normal. 

According to Dustin Jalbert, an analyst with Fastmarkets, summer will be the season where lumber prices start to correct.

‘’We don’t think +$1000 wood is the future, a lot of this is a reflection of disruptions in the supply chain and some of these short term demand and supply shocks we’re seeing. So either in the second half of this year or early 2022 we’ll see a pretty big correction in prices’’

What caused the lumber price to skyrocket in the first place?‍

There’s a handful of factors that triggered the lumber price frenzy, most of them fueled by pandemic behavioral shifts. 

The housing market is on fire with prices increasing due to record-low mortgage rates, strong demand from buyers and a persistent need for new construction. Even those residing in older constructions became part of the insatiable demand for lumber products.

Do-it-yourselfers had plenty of time during lockdown to finally wrap up that woodworking project sitting in the basement for years. These two main factors set-off a domino effect of the supply chain. The result is causing disarray and fall back which is now the main issue to solve. With life returning to the new normal, those DIY projects aren’t a concern and will have to be paused once more.

How much longer will we cope with the high prices?‍

While experts say that lumber prices will continuously decrease, this doesn’t mean that they will return to normal anytime soon. Sherwood Lumber COO, Kyle Little, stated that customer demand decreased, but retail prices won’t decrease until late July.

‘’Our forecast really hasn’t changed. We’re in month number 12 of what we believe to be a 24 to 30 month cyclical wave. Our customer are very savvy and they’re instructing their customers if it doesn’t need to be done today it might be better to take a breather and start this project late in the Q1- 2022’’.

Just like any other post-pandemic adjustment, builders and home remodelers must be cautious on their project schedules and budget – Especially if they don’t want to be left out of profit.