CHICAGO (NewsNation Now) – After skyrocketing to record highs this spring, the cost of lumber is finally falling.
Lumber futures are down almost 40% from their record highs in mid-May. July futures were trading at $967 Tuesday, compared to a peak of $1,670.50 in May.
The cost of lumber was pushed to an “unsustainable price point and now we’re seeing a little bit of pushback from the marketplace,” said Kylie Little, Sherwood Lumber’s chief operating officer, in a recent Fox Business interview.
Still, lumber prices remain high compared to pre-pandemic levels, as they came in at around $420 in mid-January of 2020.
Confidence among single-family homebuilders fell to a 10-month low in June and the higher costs and declining availability of lumber are to blame, a survey from the National Association of Home Builders showed.
Just last month, the price of a single-family home jumped in price $36,000 because of the lumber shortage, an NAHB analysis showed. This industry group says this increase has slowed the strong pace of homebuilding.
So what does this mean for home buyers and sellers? The tumbling cost of lumber won’t change the housing market overnight.
“Shortages of materials and labor have builders struggling to increase production of new homes, though the demand remains strong,” said Robert Frick, corporate economist at Navy Federal Credit Union in Vienna, Virginia. “Potential home buyers should expect tight inventories and rising prices for both new and existing homes for the foreseeable future.”
“We’re not getting lumber in a timely manner because of Covid, and the mills can’t keep up with the orders coming in,” said Steven Hatton, a distributor with 84 Lumber, back in May.
Plus, the root of the lumber shortage — not enough lumber mill employees and a decline in domestic production — still need to be addressed.
“We might have passed the peak so to speak, however, we will trade at a really, really high range for the remainder of this year-end well into 2022,” Little said.
NewsNation affiliate WJW and Reuters contributed to this report.