Lumber Prices Have Crashed Over 45%, Dropping A Point Per Day On Average

Weak home sales and generally slowing demand have sent lumber prices into a tailspin. The price for the commodity shed another 7 points over the past 7 days. Lumber is now trading at almost half the cost it was 45 days ago, at the record high. Even with that kind of haircut, experts see prices falling even lower over the next few months.

Lumber Prices Have Dropped Another 7% Over The Past Week

Lumber prices continue to spiral lower from the peak reached just over a month ago. Prices for SPF closed US$926.50/mbf on June 21, down 7.0% from last week. That brings the cost 41% lower than the same day a month ago. Technically, this is considered a crash, and it was a really fast one too. 

Lumber Prices – Commodity

The closing prices of random length lumber.

Source: TradingView; Better Dwelling.

Lumber Prices Are Down Over 45% From The Record High 

Lumber costs have been spiralling lower since the record reached in May. Today’s close brings the price 45% lower than the record close on May 7. It’s now more than halfway to the 75% drop that was forecast prior to the peak. On average, lumber prices have shaved a point per day since May 7 — 45 days ago. It may sound extreme to those not familiar with lumber prices, but they’re more volatile than you might assume.

Lumber Prices Are Expected To Fall Even Further

Experts see prices falling even further, even after the recent cratering of prices. BMO is forecasting an average price of US$415/mbf for 2022. That’s another 55.2% lower than the current price, so strap yourself in. 

A NY-based lumber executive recently said people should delay lumber projects if possible. He expects the price to fall even further as well, with his clients telling retail customers to hold off. Though he doesn’t see prices falling back to pre-pandemic levels for a few years. The former lumber trader says we’re only 12 months into a three-year lumber “supercycle.”  

Both views, while seemingly contradictory, actually aren’t. Even if prices do fall to the target forecast by BMO, they would still be about double pre-pandemic prices. It just won’t be nearly as bad as the squeeze recently seen. 

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