4 reasons why lumber prices have doubled from summer lows — and why one expert sees them normalizing again

Worker loading lumber
  • Lumber prices are on the rise once again and have doubled from summer lows.
  • A confluence of factors is putting upward pressure on the red-hot commodity but experts say lumber will normalize.
  • Lumber futures rose for the fifth-straight session on Friday, hitting $930 per thousand board feet.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell

The price of lumber has doubled from summer lows after a confluence of factors put upward pressure on the red-hot commodity, but some normalization may be on the way soon.

Lumber futures rose for the fifth-straight session on Friday, hitting a six-month high of $930 per thousand board feet and gaining 21% for the week. Still, they’re 45% below their record high of $1,711 reached in May. 

Analysts have highlighted four key factors contributing to the recent spike.

1. Floods in Canada

The main cause is severe flooding in British Columbia that has hampered the operations of West Fraser Timber, one of Canada’s largest lumber producers, according to Ross Price, director of finance at commodity trading platform Mickey Group.

West Fraser on November 30 said the natural disaster caused transportation disruptions to its rail and truck routes, including limiting access to ports for overseas shipments.

“This has closed roads and caused one of the world’s biggest producers of lumber to pause shipments,” Price told Insider, adding that the US gets most of its lumber supply from Canada. “From my perspective, it doesn’t make much sense for a supplier to produce more than they can actually ship right now.”

2. Hoarding 

Exacerbating this issue is construction companies that are hoarding materials to avoid shortages, said Vanessa Miller, a partner at international law firm Foley & Lardner.

“This is actually creating the same type of shortages that we saw early on in the pandemic,” she told Insider, noting the infamous toilet paper stockpiling the US saw last year despite the lack of an actual shortage.

If the lumber supply chain was functioning properly, the price increases would not be so dramatic, Miller added.

3. US tariffs

Adding to lumber prices is a trade dispute, in which the US has accused Canadian suppliers of dumping. Late last month, the Commerce Department confirmed it will impose a nearly 18% tariff on imports of Canadian softwood lumber producers in 2022 — more than twice the rate of 8.99% during the Trump administration.

The Biden administration initially unveiled the plan in May, causing some lumber yards to stock up and increase their orders before the tariffs kicked in.

4. Hot housing market

Tying these all together is the sustained, elevated focus in home building and home improvement since the start of the pandemic.

While the Federal Reserve has started to curb bond buys, its ongoing emergency stimulus policies continue to keep mortgage rates low, stoking further demand in the housing sector. And with the work-from-home trend continuing, Americans are still feeling free to hunt for new homes in new markets.

Why another pullback is likely on the way

Traders can expect lumber prices to retreat in the near term as mills come back online and consumer behavior — along with overall economic activity — return to normal.

Still, don’t expect prices to fall all the way back to pre-pandemic levels, David Russell, VP of market intelligence at TradeStation Group, an online broker-dealer. But the likelihood of a return to May’s peak levels is “also probably overreacting,” he told Insider.

Instead, he sees lumber prices settling around $500 to $600 per thousand board feet, roughly 45% lower than the current levels.

“This is the aftershock of that huge earthquake,” Russel said, referring to the spring price rally. “After this, we will see the volatility decrease and things will start to stabilize.”

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Lumber prices have risen 50% since August, and 2 experts say the resurgence will continue through early 2022

Lumber prices sawmill US logs wood
  • The price of lumber has seen a resurgence, which analysts expect will continue through early 2022.
  • A reason for the price increase in lumber is another wave of renovation demand, an analyst told Insider.
  • The analyst doesn’t expect lumber prices to roar back to their pandemic highs.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

One of the pandemic’s hottest commodities is staging a comeback, rising 50% since August and gaining for the sixth consecutive week.

The price of lumber – after steadily declining since its all-time high in May – is expected to continue to tick higher through early next year, experts told Insider.

Lumber futures as of October 8 were hovering around $713 per thousand board feet – still 58% lower than the record high of $1,711 achieved in May as supply chain disruptions and demand for housing drove an incredible boom for the commodity. A year ago, the lumber futures were trading at roughly $586 per thousand board feet.

But after prices bottomed out below $400 per thousand board feet in late August, they have since recovered by $100 per thousand board feet in just over a month, data from Fastmarkets Random Lengths Framing Lumber Composite Price showed.

A reason for the price increase in lumber is a modest increase in renovation demand after price-sensitive buyers proceeded with home improvement projects now that wood prices have seen a substantial correction, Dustin Jalbert, senior economist at Fastmarkets, told Insider.

Though Jalbert does not expect the kind of runup in lumber prices seen earlier this year – a period when there was a backlog of homes waiting to be built and a shortage of key construction supplies – as pandemic-related supply constraints continued to ease.

“The market has finally transitioned to a more balanced state compared with being severely oversupplied in the summer months, which ultimately drove the massive correction in prices from record-high levels set in May,” Jalbert told Insider.

And even if Americans wanted to build and renovate homes, the field consumption of lumber is being bogged down by shortages of other complementary materials such as windows, siding, cabinet appliances, and garage doors, he added.

The supply side, meanwhile, continues to face challenges, Jalbert said. Log costs in British Columbia, which accounts for about 16% of North American lumber capacity, remain elevated.

Tariffs on Canadian lumber will also likely double from 9% to about 18% by November, pending the Department of Commerce’s final determination, he noted. Such an outcome will raise production costs on lumber shipments to the US market, which will ultimately put further upward pressure on lumber prices, Jalbert added.

Chip Setzer, director of trading and growth for Mickey Group, a commodity trading platform, also does not see lumber prices skyrocketing, not even past $1,000 per thousand board feet, he told Insider. While prices are historically elevated, he said the range lumber prices are currently in now is a fair valuation.

“I like that number,” he said, adding that the price floor of the commodity may have permanently moved higher compared to the roughly $300 per thousand board feet pre-pandemic. “It’s good for the forest. It’s good for the guys who work in the sawmill … It’s good across the board.”

Setzer also said that while the market may see some slowdown into year-end, it will also see an uptick by the second quarter of next year. “People are still under-housed,” he said.

Lumber prices at the start of the year surged, along with energy prices, like oil and natural gas, and used car prices, pushing up inflation to 30-year highs. Demand across commodities has since cooled as consumers absorbed the sky-high prices and as the economy reopened.

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3 reasons why lumber prices will tumble 30% by year end, according to a veteran portfolio manager

A crane lifts logs onto a stack at the timber terminal in the seaport of Wismar.
  • The price of lumber has yet to bottom – and will fall as much as 30% off by the end of the year, Micheal Gayed says.
  • Gayed is an award-winning portfolio manager for Toroso Investments who has long touted lumber as a powerful indicator for the US economy.
  • He gave three reasons why lumber could fall to $357 per thousand board feet by the end of 2021.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

The price of lumber has yet to bottom and will shed as much as 30% by the end of the year, veteran portfolio manager Micheal Gayed said.

This means the commodity could slip to as low as $357 per thousand board feet, from around $510 per thousand board feet lumber was trading at on August 27.

Gayed, an award-winning portfolio manager for Toroso Investments who has long touted lumber as a powerful indicator for the US economy, said there are three reasons the commodity will see a protracted slide.

First is the slow down in housing construction as elevated prices dissuade buyers and sap demand, he said. The market is set to reverse, and if housing cools, so will construction, he added. Various data show that the housing crisis is getting worse in the US.

“Lumber is sort of your closest real-time gauge of housing activity,” Gayed, who also runs the ATAC Rotation Fund, told Insider. “Housing activity is probably just due to slow down aggressively.”

Lumber prices have slipped 70% from record highs of $1,711 reached in May. Prior to that record, prices had skyrocketed more than 500% during the COVID-19 pandemic amid supply-chain disruptions.

Gayed’s second reason is an oversupply in lumber as sawmills rushed to meet demand, he said. Lumber production, which starts in the mills, was severely disrupted when much of the economy shut down.

But now, many analysts see North America’s biggest lumber producers set up for a rebound following an immense blow during the height of the pandemic caused by lockdowns and raging wildfires.

The third reason, Gayed said, is that the market will soon realize that inflation is indeed transitory. Lower inflation typically results in lower Treasury yields, and yields, he says, generally move in the same direction as lumber.

Gayed is well known for his 2015 report on the relationship between gold, lumber, and the economy, and when to play “offense” and “defense.”

If lumber is outperforming gold in roughly four months, Gayed said, investors should take a more aggressive stance as this indicates economic strength. If gold is outperforming lumber in the same time period, he advises investors to do the opposite.

A final reason lumber could see a further downturn – one which Gayed says is less talked about – is the looming crisis related to the debt ceiling, which US Republican lawmakers have recently signaled they will not lift.

“The implication is that if S&P and Moody’s downgrade US debt like they did in 2011, and the reaction is the same, it … would broadly hurt economic activity.”

Gayed pointed to the massive correction in 2011 when the US stock market crashed after a credit rating downgrade by S&P – the first time the country was downgraded.

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2 reasons why lumber prices will tumble another 28% from 13-month lows, according to one analyst

Logging wood for the Vyatsky Plywood Mill owned by Segezha Group in a forest in the Nema District. A subsidiary of AFK Sistema, Segezha Group is a fully and vertically integrated timber holding employing advanced wood processing technologies. Alexander Ryumin/TASS

The price of lumber slipped to a 13-month low on Wednesday and the commodity could see a further slide of 28% by the year-end, according to Naeem Aslam, chief market analyst at AvaTrade, an online broker.

Aslam said he sees lumber trading as low as $330 per thousand board feet by the end of 2021 or in the first quarter of next year, reflecting the 28% downside from current levels.

“Now is definitely not the time to fish that bottom,” Aslam told Insider. “There is a huge correction ahead … Prices will continue to fall from here.”

He gave two reasons for his outlook.

First, when the Federal Reserve starts to tighten its monetary policy, the housing market, he said, will cool as rates rise. Speculation that the central bank will taper assets sooner than expected has been rising amid a robust economic rebound this year.

“The housing sector has built up a massive backlog,” he told Insider. “How that backlog was built was because of extra cash which was injected.”

Aslam was referring to the three rounds of stimulus checks millions of Americans received in the wake of the pandemic. But now that a fourth stimulus check is unlikely given the accelerating pace of the recovery, demand, he said, will abate.

“The reality is that helicopter money really pumped up the massive demand in terms of material,” he said.

Aslam also noted the shortage of affordable homes for sale in the US has persisted for years.

Second, when China accelerates the pace at which it releases inventory from its strategic reserves, there will be an oversupply in the commodities market, which will push prices, including the price of lumber, down.

The Asian superpower has been trying to cool surging prices – including oil, coal, and metals – by releasing stockpiles as the world’s second-biggest economy looks to bring manufacturing costs down amid rising inflation.

“We see China cracking down massively,” he told Insider. “That is going to bring the prices lower for these sorts of assets.”

Lumber futures as of August 18 were hovering around $458 per thousand board feet – 73% lower than the record high of $1,711 achieved in May. In July last year, it was trading at $438 per thousand board feet.

Lumber prices skyrocketed more than 500% in the 15 months after the COVID-19 outbreak as supply-chain disruptions collided with a demand for housing and activity from homebuilders.

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Lumber prices have already bottomed – and 3 forces will drive them higher going forward, one investment head says

Lumber prices sawmill US logs wood

The price of lumber has already bottomed after a sharp sell-off and should stabilize around current levels in the coming weeks, according to Ed Egilinsky, managing director and head of alternative assets at Direxion.

Lumber futures traded slightly lower around $530 per thousand board on Monday, and sit nearly 70% below a record high of $1,711 reached in May. Prior to that record, lumber prices had skyrocketed more than 500% during the immediate aftermath of the COVID-19 pandemic amid supply-chain disruptions and accelerating homebuilder growth.

Egilinsky said he sees the recently tested $500 level as a support level for the commodity, even though it’s still elevated relative to pre-pandemic pricing.

“I think it’ll stabilize here relative to the downtrend that it’s seen pretty much since the middle of July,” he told Insider.

Egilinsky laid out three specific drivers he sees underpinning lumber in the coming weeks. These in confluence should significantly curtail the supply of lumber and push prices higher, he said.

First is the tightening labor market. Egilinsky said this is the reason why fewer mills are in operation.

His assertion was supported by new data that showed job openings in the US soaring to a record 10.1 million in June, which exceeded the number of available workers for the first time since the pandemic.

Second is the raging wildfires.

“Fewer mills are in operation due to the wildfires,” he said, adding some of the impacts of these remain unforeseen.

These fires, for instance, have already affected major players, such as Canfor, one of the largest lumber producers in the US. The company on July 20 announced cutting back output at its mills in British Columbia.

Third is the emerging Delta variant.

Egilinsky said the threat of the new strain might risk the shut down of sawmills, disrupting yet again a supply chain that is just about to bounce back.

“[Sawmills] may need to be shut down for any period of time,” he told Insider.

Read more: Credit Suisse says buy these 21 growth stocks now as it’s the perfect time for them to thrive while rates fall – and to minimize the risk of losses

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Lumber prices are on pace to plunge 45% in June after a record-breaking rally driven by homebuilding demand

A lumber yard

The price of lumber futures is on pace to plunge 45% in June for one of the largest monthly drops ever, as the hot commodity comes off a record-breaking rally.

Lumber prices have been on a rapid decline since their May 7 peak of $1,670 per thousand board feet.

As of June 30, the price of lumber has slipped around 45% to $721 per thousand board feet- and is now on track to have its worst month since 1978. Exactly a year ago, lumber futures closed at $435.

“I would not be surprised at all if we see the price continue to trail lower than $600 or below toward the year-end,” Mace McCain, president and managing director at Frost Investment Advisors, told Insider. “We will continue to see supply come on board but we will not see demand continue to grow.”

McCain added that this level will be more sustainable for the wood industry and will make housing more affordable.

While it is difficult to point to one specific reason why the price of lumber futures has pulled back, some experts attribute it to the economic reopening, which has caused more people to spend less time at home.

To begin with, the price skyrocketed at the start of the pandemic when restrictions forced Americans to shelter at home, prompting many to either build new houses or renovate existing ones.

Read more: ‘If lumber crashes, stocks might be next’: An award-winning portfolio manager who’s tracked lumber prices for years breaks down why futures hitting a record high of $1,600 is an ominous sign – and shares what investors can do ahead of the eventual crash

Chip Setzer, director of trading and growth for Mickey Group, a commodity trading platform, agreed that this range is what he would consider a fair valuation as well.

He has told Insider in the past that the sweet spot would be $600-$900 as this range gives sawmill operators, truck drivers, and other players in the industry more cushion for capital upgrades and operational improvements.

Setzer did express concern that while the prices are much more reasonable now due in part to a more functional supply chain, the industry simply cannot afford another disruption.

“I have strong concerns that we will have interruptions, which will have adverse effects on supply,” he told Insider.

Setzer mentioned the recent wildfires in British Columbia, where the US gets part of its lumber supply, as well as the upcoming hurricanes in Texas and Virginia.

“If the forest is on fire we can’t get logs,” he said. “That will change the tables.”

Apart from supply chain issues, Brad McMillan, CIO at Commonwealth Financial Network, said the wild price fluctuations could also be due to market distortions, where a “real lumber shortage” turned into “something much worse.”

He said this, then, resulted in higher prices, which caused more panic buying, until some sort of limit was “reached.” At this point, which seems to be now, the price will head down, he said.

Earlier in 2021, lumber prices surged, triggered by a confluence of factors – a pandemic, concerns of an overheating housing market, and millennials reaching home-buying age. On top of this, there was already a shortage of lumber supply before the pandemic even began.

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The price of a plywood substitute that used to be cheap is hitting repeated record highs even as lumber’s rally cools

TORZHOK, TVER REGION, RUSSIA - FEBRUARY 10, 2017: Inside the Talion Arbor high-technology timber plant launched as the Torzhok branch of STOD LLC.
  • The price of a formerly cheap plywood substitute called oriented strand board has surged 97% since the start of the year.
  • The rally in OSB is due in part to the storm in Texas, which caused a shortage in a substance needed to make the board.
  • OSB has continuously hit record highs in recent weeks even as the price of lumber has cooled.
  • See more stories on Insider’s business page.

The price of a plywood substitute that used to be cheap is hitting repeated record highs, adding to the already skyrocketing cost of building a home in North America.

Oriented strand board, or OSB, traded at $1,527 per thousand board feet in June, marking a 97% increase since the start of 2021, according to Bloomberg data.

The rally in OSB is due in part to a storm in Texas earlier this year that caused a shortage in resin, a chemical substance needed to make the product.

OSB is a versatile wood panel that shares many of the characteristics of plywood but at a more affordable price. It is a combination of wood and adhesives and is structurally stable and lightweight.

The wood industry has been one of the biggest beneficiaries of the pandemic, as more people built and renovated their homes. When new home construction and home-improvement sales boomed earlier this year, inventory for lumber and OSB, among other commodities, were running low.

Experts said the surge was unexpected. The industry, for that reason, struggled to catch up.

“You don’t just start up a mill at the snap of a finger,” Drew Horter, president and CIO of Tactical Fund Advisors told Insider. “This is a supply chain problem.”

OSB’s continued rally to new heights comes at a time when lumber prices are cooling after an epic 400% rally over 12 months.

“It’s even more difficult to get OSB at the moment than it is lumber,” David Flitman, CEO at Builders FirstSource, told Bloomberg TV on Wednesday.

Read more: Bank of America says to buy these 31 small- and mid-cap stocks with average implied upside of nearly 30%, as they represent its best ideas for the 2nd half of 2021

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Lumber prices avoid 7th straight decline with late-day surge as the commodity’s blistering 250% rally whipsaws

Worker loading lumber
  • Lumber prices avoided a seventh straight day of losses on Wednesday after spiking into positive territory right before 3:30 pm ET.
  • Prior to the surge, the commodity fell 2.41% to trade at $1,237 per thousand board feet.
  • Despite recent weakness, prices are still up roughly 250% since this time last year.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

A late-day surge helped lumber prices avoid a seventh straight daily decline as the commodity’s blistering 250% rally over the past year whipsaws.

Prior to the recovery, lumber futures traded down 2.41% to $1,237 per thousand board feet on Wednesday. Despite the rebound, the commodity is still down roughly 20% from its May 7 record high of $1,670.50 per thousand board feet.

As lumber prices fluctuate, local news outlets continue to reveal the effects of historically high lumber prices on consumers.

ABC’s Louisville outlet reported the story of Kenny Marine, the founder of Kentucky Hot Brown Pedalboards, who says his costs have more than doubled since last year.

“Something last year that cost me $12, $14 is costing me $30, $35, $60 in some cases depending on what wood I buy, and that’s the killer right there,” Marine told ABC.

CBS’s affiliate KXAN in Williamson County, Texas, reported that the construction of a new county-run children’s advocacy center is on hold due to increasing construction costs brought about by the spike in lumber prices as well.

Republicans have used rising lumber prices and inflation concerns as political tools to attack President Biden’s administration.

Rep. Bob Gibbs, R-Ohio, who serves on the House Oversight Committee’s environment subcommittee, told FOX Business that increasing lumber prices are “just one of the many indicators that President Biden is failing American workers.”

“Lumber prices are an issue that has many causes, from economic complications from the coronavirus pandemic to difficult trade issues with Canada. Biden has shown he is either unwilling or incapable of tackling these obstacles,” Gibbs told FOX Business.

The representative is referring to a proposed tariff hike on imports of Canadian softwood lumber. The US Commerce Department recommended doubling tariffs on Canadian softwood to 18.32% from 8.99% just two weeks ago despite rising lumber prices.

However, it’s important to note a similar tariff was originally imposed by the Trump administration before a decision favoring Canada by the World Trade Organization caused the tariff to fall to around 9% late last year.

Read more: ‘If lumber crashes, stocks might be next’: An award-winning portfolio manager who’s tracked lumber prices for years breaks down why futures hitting a record high of $1,600 is an ominous sign – and shares what investors can do ahead of the eventual crash

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US authorities move to double tariffs on Canadian lumber despite a meteoric rise in prices and demand

British Columbia Lumber
  • The US Commerce Department recommended a doubling of tariffs on Canadian softwood lumber last Friday.
  • The move comes despite lumber prices being up more than 275% since April of last year.
  • “The White House does not care about the plight of American home buyers and renters,” National Association of Home Builders chairman Chuck Fowke said.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

The US Commerce Department recommended a more than doubling of the tariffs on Canadian lumber last Friday despite a meteoric rise in prices and demand for the commodity.

Specifically, the department recommended the “all others” preliminary countervailing and anti-dumping rate move to 18.32% from 8.99%.

The proposed rates are subject to further review over the next six months before final duties are set sometime in November.

Former President Donald Trump’s administration imposed a similar 20% tariff on Canadian softwood in 2018, but lowered it to around 9% late last year after a decision favoring Canada by the World Trade Organization.

The move to increase tariffs on Canadian lumber suppliers comes as lumber prices have risen over 275% since last April alone. Canada’s share of the US lumber market sits at around 25% as well, according to the Wall Street Journal.

On May 22, National Association of Home Builders chairman Chuck Fowke released a statement criticizing the move to increase tariffs.

“At a time when soaring lumber prices have added nearly $36,000 to the price of a new home and priced millions of middle-class households out of the housing market, the Biden administration’s preliminary finding on Friday to double the tariffs on Canadian lumber shipments into the U.S. shows the White House does not care about the plight of American home buyers and renters who have been forced to pay much higher costs for housing,” Fowke wrote.

“The administration should be ashamed for casting its lot with special interest groups and abandoning the interests of the American people,” he added.

Canadian authorities also rebuked the newly proposed tariffs.

“US duties on Canadian softwood lumber products are a tax on the American people. They make housing less affordable for Americans and hinder economic recovery from the COVID-19 pandemic,” said Mary Ng, a Canadian MP and the minister of Small Business, Export Promotion, and International Trade.

“We will keep challenging these unwarranted and damaging duties through all available avenues. We remain confident that a negotiated solution to this long-standing trade issue is not only possible, but in the best interest of both our countries,” she added.

On the other hand, US timber producers applauded the new tariffs on Canadian companies. Jason Brochu, the US Lumber Coalition co-chair, said the Commerce Department’s decision represents a move to create a level playing field in the industry.

“A level playing field is a critical element for continued investment and growth for U.S. lumber manufacturing to meet strong building demand to build more American homes,” Brochu said in a statement.

“More lumber being manufactured in America to meet domestic demand is a direct result of the trade enforcement, and we strongly urge the Administration to continue this enforcement,” he added.

Insider spoke with Stinson Dean, the founder of Deacon Lumber Company, about differing perspectives from experts regarding the newly proposed tariffs.

Dean said he doesn’t know how the new tariffs will impact prices, but said that last time a tariff increase was announced, prices skyrocketed, although from much a lower base.

However, Dean also said the “tariff should be judged on its merits and not a kneejerk reaction to the current market,” noting that scarcity of supply is the main issue when increasing tariffs, not pricing.

“In my mind, any tax on Canadian lumber incentivizes them to look sell to other markets. The US needs all the supply it can get-and buyers will clearly pay for it-but if it doesn’t exist, it brings construction to a halt. Scarcity is the problem, not price,” Dean said.

Dean recommended a “ceasefire” from tariffs for the next 12 months to give both sides time to lock in a long-term agreement because the industry needs “all the supply in the world pointed at the US.”

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Lumber prices fall for an 8th straight day, deepening a roughly 30% pullback

lumber and building materials store

Lumber prices fell for an eighth straight day on Wednesday, deepening a roughly 30% pullback in the commodity.

Specifically, lumber futures fell roughly 5% to $1,201 per thousand board feet on the day.

Despite the pullback, lumber futures are still up 224% since May 19 of last year, and retailers like Home Depot have made it clear demand remains strong.

Home Depot’s chief financial officer Richard McPhail said in a Tuesday interview with Bloomberg that lumber sales are comparable to “a storm environment where literally as soon as you bring it in, it’s selling.”

“We’re really just focused on making sure we stay in stock and making sure we have the appropriate level of staff to serve our customers. The market will go where it goes,” McPhail added.

On Home Depot’s post-earnings conference call, Edward Decker, the executive vice president of merchandising, said the company had seen a “record-setting quarter for lumber prices.”

“At the end of the first quarter of last year, a sheet of 7/16 OSB [oriented strand board] was approximately $9.55. As we exited the first quarter this year, that same sheet of OSB more than quadrupled in price to $39.76,” Decker said.

Lumber prices have increased so much that CBS Denver reported thieves have taken to stealing the commodity from construction sites.

And KUTV Utah reported builders are looking for alternative materials to get around the rising costs of lumber, with some even turning to Bamboo.

US home construction also fell 9.5% in April, according to US Census Bureau data, as homebuilders struggled with rising commodity prices in lumber, copper, and steel.

Still, lumber prices are falling in the past week due to the end of a “de facto short squeeze” on the commodity, according to Stinson Dean, the owner of Deacon Lumber Company.

Brian Leonard, an analyst for RCM Alternatives in Chicago, also noted lumber futures are being driven down by “computerized trading and other platforms not related to the physical product, so it may end up going lower than the real market need to go,” per Bloomberg.

“The mills know there’s a lot more buying than needs to happen,” he added.

Lumber stocks like Weyerhauser and West Fraser Timber fell as much as 4.58% and 5.77%, respectively, on Wednesday in lock-step with declining lumber future prices.

Read more: ‘If lumber crashes, stocks might be next’: An award-winning portfolio manager who’s tracked lumber prices for years breaks down why futures hitting a record high of $1,600 is an ominous sign – and shares what investors can do ahead of the eventual crash

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