Lumber prices just dropped for a 9th straight week amid slowing DIY spending

lumber and building materials store
  • Lumber prices notch their ninth consecutive weekly loss after a brief resurgence earlier in the week.
  • The price of the key building material has slid about 60% from its peak in early May.
  • A shift in spending away from DIY home projects is impacting the market, says Bank of America.
  • See more stories on Insider’s business page.

Prices for lumber suffered another weekly loss and descended to levels not seen in roughly six months as the market contends with signs of softening demand and easing shortages.

Lumber prices on Friday fell about 4% to trade at $689 per thousand board feet. That move brought lumber below $700 for the first time since mid-January. Lumber during the holiday-shortened week had pushed higher, stoking the possibility of finding relief. But the advances proved short-lived, leading to the material notching its ninth consecutive weekly loss.

Prices have tumbled by roughly 60% since their peak of $1,670 per thousand board feet on May 7.

One potential factor in pushing lumber lower is consumers allocating funds to businesses such as those specializing in hospitality and travel as more Americans get vaccinated against COVID-19. About 48% of the population has been fully vaccinated, according to the Centers for Disease Control and Prevention.

“Our recent research … suggests a combination of high housing and wood product prices and the shift of expenditures to services in the reopening (from do-it-yourself [DIY] home projects) has negatively impacted new and repair/remodel construction expenditures,” wrote Bank of America analysts on Friday.

Meanwhile, dealers and builders are likely decelerating purchases leading up to a slowdown in construction that’s typical in summer months, they said. “This is especially true given long lead times – the concern being that today’s order of lumber shows up at the beginning of August just as prices move down at an even stronger pace.”

Signs of easing in lumber shortages have also fostered the pullback in prices. Sawmills have reportedly ramped up output after the pandemic prompted producers to stop work.

Lumber prices leapt to nearly $1,700 this year in part on a surge in demand for the building material as people stuck at home by the pandemic took up home improvement projects.

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Lumber prices just dropped for an 8th straight week – and they’re down more than 50% from highs as record-setting demand slows

  • Lumber prices on Friday marked eight consecutive weeks of losses.
  • Prices for the key building material have slumped 56% from their peak set in early May.
  • Lumber prices have pulled back on signs of easing inventory shortages and some demand softening.
  • See more stories on Insider’s business page.

Lumber prices extended a string of losses last week, leaving prices for the key building material slashed by more than half from their peak on a mix of factors including easing shortages.

Lumber prices fell for an eighth straight week as they lost roughly 5%. The weekly decline was spared from a deeper contraction, however, as prices on Friday picked up about 1% to trade at $741 per thousand board feet.

But the weekly performance highlighted persistent weakness that’s been stalking prices since they began descending from their peak of $1,670 per thousand board feet on May 7. Wednesday marked the end of trading in June and prices closed the period with a fall of 45%, the worst monthly drop since 1978.

Prices as of Friday from the May peak have tumbled about 56%.

Lumber prices soared earlier this year, building on gains from mid-2020 as demand for the material kicked higher as people stuck at home by the COVID-19 pandemic embarked on home improvement projects. Meanwhile, demand for new homes was strong in an environment of low inventory of existing homes.

But the direction of lumber prices reversed course and moved lower, in part as sawmills have picked up the pace of output after the coronavirus crisis forced work stoppages. About 3,000 sawmills in the country have ramped up production, according to The New York Times, with a large focus on Southern yellow pine found in East Texas to the Carolinas.

Prices also softened on signs of slowing demand with homebuilders delaying projects partly to keep hold of their inventory of building materials.

Bank of America on Friday noted it’s seeing signs of inventory shortages for lumber and other home improvement categories such as appliances and cabinets beginning to ease.

“For retailers like Home Depot and Lowe’s, lumber/building materials and appliances are two of the largest categories as a percentage of sales,” wrote Elizabeth Suzuki, a research analyst at BofA, in a note published Friday.

“While improving supply is likely a positive for the retailers’ transaction counts (as in-stocks are particularly critical to professional customers who purchase frequently), it may be met with an offsetting decline in average ticket as pricing normalizes,” she wrote.

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