Even lumber executives are now telling people they should wait for costs to fall. Kyle Little, CEO of Sherwood Lumber, told CNBC he expects lumber prices to drop over the next year. The executive even encouraged people to wait before building those discretionary projects.
Wait For Lumber Prices To Fall… If You Can
Discretionary building projects may want to wait, suggested the lumber exec. He sees lumber prices slipping over the next six to twelve months. It’s not just him telling people it’s okay to wait either. His clients have begun instructing customers to put off purchasing if possible.
For those emerging from living under a rock, lumber prices have recently been soaring. Record demand (especially from housing) and reduced mill capacity combined to make a perfect storm. Since the pandemic, prices have increased by more than 200%. No one could have planned for that large of an increase, and it’s having a disruptive effect. Everything from new homes to toilet paper is seeing higher costs as a result.
Lumber Prices Have Crashed More Than 30% Since Peak
Lumber prices peaked on May 10, and have fallen 30% since then. Despite the steep drop prices have already made, experts think there’s more. BMO’s recent forecast actually sees them falling even further over the next year.
Lumber Prices Won’t Fall To Pre-Pandemic Levels Any Time Soon
Little agreed on the timeline, saying the relief would come in the next six to twelve months. Though he warns lumber prices won’t be falling back to the pre-pandemic level. “We’re in month number 12 of what we believe to be a 24 to 30-month cyclical bull wave,” he said.
Demand for lumber is still very high, but a significant taper has occurred due to prices. It’s not just DIY hobbyists either, but homebuilders are holding back on projects. No one wants to be stuck overpaying for lumber.
With so many waiting for prices to drop, there’s going to be significant support. That’s largely why experts are saying the bull wave will continue, while expecting a drop of over 60% in the near term. People need and want lumber, but not everyone wants it at these prices.
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