Lumber Wholesale and Future Prices Go Timber
But builders may not be getting that much relief.
By Erik Sherman | March 06, 2023
After a long series of up and down reversals, lumber prices are in a cooling period. As of early March, spot lumber prices have moved forward into the past — last reported at $370 per thousand board feet. It’s a major tumble since January when prices were up 14% over the close of 2022, as Insider reported at the time. Sherwood Lumber told them that the “industry could actually find itself in an undersupplied market during the height of the building season.”
Which is an example of why trying to follow markets point-by-point can be a frustrating experience. Now Yahoo Finance reports that the “days of pricier lumber may be over” and that in a note from UBS in February, a source said that most products would never be at pre-Covid prices again.
That seems odd, given how far prices are down. But it may not be an isolated view.
“I am hearing that a lot of builders are not seeing reported drops in wholesale pricing relative to what they are seeing from people they buy from,” Ashley Boeckholt, chief revenue officer of MaterialsXChange tells GlobeSt.com. “Our suggestion would be to go out and ask more vendors for pricing and then arm yourselves with data to ask for better pricing.”
The question may not be one of raw pricing but the ability to demand more money and keep the profits. “The reason for much of the consolidation of building industry participants over the years was to create pricing power,” Boeckholt added. “It worked.”
“Some of the other core items may still be high, but we are hearing many of those are also starting to loosen up,” he says. “Higher interest rates along with uncertainty can do this to pricing — and loosen up once tight items.”
As for pre-pandemic pricing levels, Boeckholt said not to be certain. “Markets always do what causes the most pain, and none of us are ever smart enough to strap on a surgery mask and pick exact prices,” he says. “The lower prices go we will see a production response from lumber producers, but I am always amazed at how long they can run — and how low the price can go — before it happens. This is the reality of me being in this market my entire life.”