U.S. home improvement wave cools as lumber prices may wave away previous gains.
A lumber price pointer fell from its highs for the first time in months, the latest sign of a possible slowdown in lumber’s unprecedented rally.
In a 28-day report, Canadian Imperial Bank of Commerce (CIBC) analyst Patel pointed out that the price indicator measuring North American fir (SPF) fell last week for the first time in 18 weeks. According to Random Lengths, a lumber industry publication, SPF quotes fell 1.8% to $1,600 per 1,000 board feet last week; 2-inch by 4-inch southern yellow pine fell 5.8%, while the Random Lengths Composite Index fell 1% from its record high.
At the same time, the Chicago Mercantile Exchange (CME) lumber futures reversed after climbing to a record high earlier this month, plunging 30% at one point, with the May monthly line likely to close in the black.
Sawmills seem to have finally caught up with the demand for construction in North America, the people who have been vaccinated against the new crown began to vacation rather than spend money to renovate their homes, and many construction projects have been shelved because of high prices and shortages of raw materials.
Goodman, vice president of purchasing at Sherwood Lumber, said, “We are seeing a slowdown in demand and an increase in supply on the market. We’re really lowering our purchases.”
Patel said that despite signs that the home improvement boom is cooling off and the U.S. lumber supply is increasing, demand for lumber is still quite strong and buyers may soon have to move in again, which will keep lumber prices steady at more than $1,000 per 1,000 board feet throughout the year.