Dec 29, 2022 at 2:00 pm ET
The Lumber Frenzy has Fizzled
Lumber was the pandemic’s hottest commodity, but now there’s little demand and prices are falling.LANDON SPEERS FOR THE WALL STREET JOURNAL
Americans were living in lockdown the last time wood prices were so low.
Wood-pricing service Random Lengths said that its framing-lumber composite index, which tracks cash sales in several species, dropped this week to $380, down more than 70% from early March and the lowest since May 2020. Benchmark wood-panel prices are down more than 80% from their peak earlier this year and lumber futures have fallen back to about where they traded before Americans emerged from lockdown on a building binge.
Higher interest rates are mostly to blame. Rising borrowing costs snuffed out the rally in home-construction and now imperil the remodeling boom, giving lumber yards little reason to stock up.
“Faced with an abundance of reasons to withhold purchasing, many buyers have run inventories to historically low levels,” Random Lengths said in its weekly market report. “Bolstered by a cacophony of voices supporting their efforts to prepare for a bearish start to the year, most dealers and distributors have stayed out of the market for anything other than small, fill-in loads.”