- Lumber prices are looking for directions as the housing market is finally showing signs of slowing.
- Recent mortgage rate amnesty has contributed to the rise in timber prices in early July, but these rises are slowly declining.
- Homebuilder confidence has risen to levels never seen since the start of the pandemic.
Supply and demand equilibrium may finally be met wood Prices that have been looking for directions in the last few weeks.
Significant construction products have been trading almost flat since early July, as the housing market is showing signs of slowing due to the recent rise in mortgage rates.
Timber prices soared 45% from June’s lows, but these rises are 25% as there are increasing signs that homebuilding activity has ceased due to lower demand from homebuyers. It is getting worse than.
The June low of $ 517 per $ 1,000 board foot was driven by a temporary easing of ultra-high mortgage rates, which fell by about 50 basis points in just two weeks, according to the report. Data from Freddie Mac. However, most of these profits are evaporating as major 30-year fixed mortgage rates are still rising at their highest levels in years.
This year’s mortgage rates doubled rapidly from about 3.0% in January to nearly 6% today, and homebuilding activity slowed sharply as homebuyers became out of control of monthly costs. This is a problem for the timber industry as the demand for home construction is a major factor in timber prices.
Another driving force, supply, is showing signs of easing as British Columbia factories return online. Following the debilitating floods at the end of last year.
That deceleration appeared in NAHB / Well’s Fargo Housing Market Index of the Week, This was down 12 points to 55 with the construction of a new single-family home in July. This is the lowest since March 2020 and represents the second largest monthly decline in index history.
Home builders’ comments from a June survey conducted by John Burns Real Estate Consulting reflect a sharp drop in the NAHB index. The main theme of the survey is that the withdrawal of new home buyers, the reduction of home prices have become commonplace, and the cost pressure in the construction industry has finally eased. According to Rick Palacios Jr. of John Barnes
“Someone shed light on our sales in June,” an Atlanta homebuilder said in a survey. Meanwhile, Austin’s homebuilder said, “Sales have fallen off the cliff. We are selling one-third of March and April sales.”
Falling timber prices and other commodities such as metals and oil can mean that inflation is about to slow down. This will be a pardon for many stock market investors who have dealt with the orderly bear market earlier this year.
Lumber prices have fallen 44% year-to-date, down 63% from their May 2021 highs, and down just 0.29% on Tuesday trading.