Home Construction Slowdown Drives Decrease in Lumber Prices
As home construction activity declines, the price of lumber drops by 24%
July 1, 2024
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As home construction activity has declined, the cost of lumber has also been dropping.
Lumber prices have dropped significantly this year due to lower demand during the peak home-building season. According to Business Insider, prices have fallen 24% from their mid-March peak to $473 per 1,000 board feet. Initially, there was optimism for 2024 due to a housing deficit and expectations of lower interest rates, leading to increased inventory. However, housing starts and new building permits declined this year, and new-home sales have slowed due to elevated mortgage rates and high home prices.
The sharp decline is an about-face from the start of the year, when lumber brokers were excited about 2024 prospects for the commodity due to a US housing market that is sorely in need of new homes.
"We entered 2024 with optimism for the year to come with a housing deficit that needs to be filled, commodity lumber and structural panel prices reset to a pre-covid range, and a Fed that stopped raising interest rates with hopes of many cuts to come," Sherwood Lumber senior vice president Josh Goodman told Business Insider.
