Home Construction Market Boom Lifts Lumber Prices

Here’s some lumber news. Home builders are constructing more new houses than they have at any time since the last decade’s foreclosure crisis. With this construction boom comes rising lumber prices. Lumber futures are up since last year’s lows when bad weather and an oversupply caused a dip in prices.

Recent Events

The current high prices still haven’t matched the prices in May 2018. That was when a combination of wood-boring beetles, wildfires and tariffs on imports from Canada caused a truly enormous spike in prices. 

Now, home builder stocks are doing really well because of low mortgage rates that entice home buyers, as well as a yearlong dip in lumber costs.

Home builders such as D.R. Horton Inc., PulteGroup Inc.  and others are doing great in the stock market. All the construction they’re doing is boosting the demand for wood products.

According to Random Lengths, a trade publication, plywood prices have been rising. Financial analysts are suggesting that investors should get more shares in the timber business. Likewise, they say that wood prices will continue to rise given how much supply was taken off the market over the last year. Mills are making up for last year’s lows brought on by beetles and wildfires. 

Thank the U.S. Housing Market

In short, the U.S. housing market is doing well and it’s lifting lumber prices. The largest consumer of solid wood products from Canada and the US is the US housing market. It’s recovered since the crash in 2008, when the North American saw-milling industry really took a bad hit. 

These days, the mix of wood products bought by U.S. customers has changed. The home construction market has shifted to a higher ratio of multi-family housing. While single-family abodes used to be the In Thing, now apartments and condos are making up a higher proportion of home building. 

It should be noted that different softwood lumber commodities are used in multi-family housing compared to those used for single-family homes. This is due to building codes that require different dimensions to accommodate higher ceilings.