Lumber Tumble

Jun 10, 2022

Lumber prices are going down: they’re yelling, “timber!”

Some background: We all remember the high costs of lumber during the height of the pandemic. With supply chain issues and labor shortages, prices went as high as a sycamore grows.

Inflation tree-tment: Now, with rising inflation rates and higher inventories, the prices of lumber are going the other way—dropping 52% since March.

How Canada fits in: The U.S. depends a lot on Canadian imports of lumber: 85% of the imported lumber used in the U.S. comes from our friends to the north. Adding to the frustration in the lumber markets is a tariff increase on Canadian lumber shipments from 9% to 17.9%.

What this means: People are ready to build their houses (9 out of 10 houses in the U.S. are wood-framed), while sawmills are decreasing production levels. New home constructions rose 6.8% in February, 22% above the level of February 2021.

But with lowered production, the CEO of Deacon Lumber in Kansas City says the U.S. doesn’t have enough lumber to meet the demand of new house construction—nearly 2M homes.

As recession predictions grow, there’s still some concern about what the lumber industry—particularly lumber demand—will look like.