Lumber prices fell to their lowest level since June 2020 on Monday as surging mortgage rates continue to slow home sales and put a major dent in home builder confidence. The once red-hot commodity fell 9% in three days to a low of $382.80 per thousand board feet, down 64% year-to-date, Insider reports.
Existing home sales fell 6% month-over-month in October as a growing share of buyers refused to stretch their budgets in order to afford home purchases in a high-cost market, and the decreasing demand caused home builder confidence to fall for the 11th straight month to its lowest level in a decade.
All of this has put a dampened mood on the outlook of US home builders, who drive a bulk of the demand for lumber as they embark on new construction projects.
The report showed that builders are adding more buying incentives to spark sales of new homes, signaling how higher mortgage rates have taken a toll on prospective buyers. That's why any reversal in this year's sharp uptick in interest rates could have a strong effect in shoring up confidence in the US housing market.