Wood is cheaper, but prices remain firm.

Lumber prices have tumbled in the last several months, erasing any gains picked up earlier in the year. Lumber prices were on the upturn at the height of the COVID-19 pandemic, as homeowners experienced an increased interest in home construction and remodeling. However, with the economy gradually opening back up, the interest in remodeling has faded, leaving lumber mills with a surplus of product.

Lumber just keeps cratering pic.twitter.com/ZpNK9TkCDq

— Joe Weisenthal (@TheStalwart) July 16, 2021

From their record high in May, lumber prices have dropped by at least 50%. However, while retailer lumber values are down, customer-side prices have remained exactly where they are.

“As the price declines began grabbing headlines, the price of lumber packages quoted to builders held at record highs,” wrote David Logan, senior economist at the National Association of Home Builders. “In economics jargon, prices paid by builders—or ‘street’ prices—were ‘sticky.’ This dynamic is primarily due to dealers’ inventory carrying costs and potentially large differences between the price at which inventory is bought and sold.”

After a 59% decline, the price of Lumber is now down on the year. It was up over 130% in early May. pic.twitter.com/aLdSyncS7G

— Charlie Bilello (@charliebilello) July 13, 2021

“We are still in a price discovery mode,” said Michael Goodman, director of specialty products at Sherwood Lumber. “Everyone is going to try to hold on as long as they can, but the market is going to find its way. Maybe in the end the price is higher because of inflation, but we are definitely in a housing boom now. That doesn’t seem to be going away.”