Posted on 06/05/2018 6:52:50 AM PDT by reaganaut1
The good news for home builders and house hunters is that lumber prices have sold off since hitting an all-time high in mid May. The bad news: wood prices are still up 66% over the past year, adding thousands of dollars to the cost of each new house.
The historic run-up in lumber prices–attributable to a trade dispute with Canada, wildfires and limited rail capacity–comes as U.S. home builders are already struggling to meet demand amid shortages in buildable lots and labor.
Lumber futures at the Chicago Mercantile Exchange closed at $586.80 per 1,000 board feet on Monday, down 8.2% from the all-time high of $639 reached May 17 but still sky high in a market in which prices have only occasionally eclipsed $400 over the last three decades.
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Surging softwood prices aren’t entirely responsible, of course, but they offer a glimpse into how the Trump administration’s protectionist trade stance might ripple through the U.S. economy as tariffs are imposed on other raw materials, such as steel and aluminum.
(Excerpt) Read more at blogs.wsj.com ...
I asked a local lumber store what was up with that- they said the hurricanes and rebuilding had taken up a lot of the supply.
The Feds made sure that inflation would roar during Trump’s admin. The way they jacked up rates last year was meant to assure that. And of course with the economy booming, the impact is all the greater.
When I moved to KY seven years ago. A four by eight sheet of chipboard cost $6.99. About three years later, it was at $17.99. A couple of years after that, it dropped to around $7.99. It’s currently at about $14.99.
There are all sorts of reasons for that, be it hurricanes, fires, market speculation, etc. I’ve learned to just time my projects for the dips.
Interestingly, the price of 2x4’s is pretty constant, but slowly rising.
Not quite sure that they are jacking the rates for political reasons, but Yellen and the Feds almost certainly did suppress the rates and refuse to incrementally raise them in order to try and keep the dismal economy going under Obama.
The interest rates should have slowly been increased during the last 18 to 24 months of Obama’s term but they didn’t, you know, for that legacy thing. Even still, Obama’s economy never exceeded, what?, 2% growth? — ever. That is a record low for any presidential term — ever.
Now that Trump has the economy roaring, there is no room to dawdle, the Feds are now forced to move a lot faster to ensure inflation doesn’t take off.
What Free Traitors want you to believe is that the supply function is static and no new domestic suppliers will EVER come on line. Despite their best efforts brand new factories are still being built in the USA all the time. Not as many as are closed mind you but the situation is dynamic and not static. With more domestic supply will mean pressure to reduce prices.
The price will be higher, post tariff. Much higher at first them lower later on as domestic supplies kick in.
There is no threat of inflation. Wages are stagnant and will remain so for decades thanks to globalist immigration policies.
Well said.
Yep, I am here in the Northwest and my anecdotal observations have been that the lumber mills are running at full capacity now, unlike a few years ago. Many more logging trucks on the roads, more trains transporting finished lumber, and way more stacks of finished lumber in the yards. Train activity has picked up considerably.
I take it as a good sign of economic activity!
New suppliers will fill the gap causing prices to settle back down.
It always works that way except when democrats control Congress or the WH and they sell out to manipulators.
Canadian softwood lumber is crap for the most part.
It’s cut from little trees and it’s full of knots and it warps. There are premium grades from the fir forests of BC, but it’s expensive too.
Interestingly, America’s and Canada’s best logs end up on ships headed to Japan and China. Because they are willing to pay a premium price.
This problem is easily fixed by outlawing LOG exports, allowing only finished lumber to be exported.
Or, bring the Siberian forests online.
Increasing interest rates is meant to keep the economy from overheating and reducing inflation rather than the opposite.
If we harvested our forests instead of letting them burn to the ground there would be plenty of lumber, but we have sacrificed the US industry in order to pump up the Canadian industry
When the economy grows, demand does what? When demand does that prices do what? When price does that supply does what?
It’s called the business cycle folks.
… limited rail capacity …What, federally-funded highways not taking up the slack after regulating the railroads into five major companies and a handful of smaller companies, with half the capacity there used to be and useless-to-commercial-purposes rail trails in their place?
Yep. The business cycle and fluctuations are not a bad thing. I am surrounded by tens of thousands of acres of trees out here. This means jobs and economic activity in my region.
The increase in lumber prices is a function of the increase in demand across North America and the inability for the North American mills to increase supply. There are a number of factors: last years BC forest fires, the hurricanes last fall, the CN inability to supply enough center beam flatcars, the tight labor market, the 20% duty on Canadian lumber and the lack of flatbed trucks have all caused constraints in supply. The only increase in NA production is coming from the southern US.
There has also been a large increase in lumber coming into the east coast from European mills. The fact is we are just finally getting back to what would be considered normal housing start numbers(1.3 million) for a population of 300 million people. For example, in 2005 we had 2 million starts. In 1998 at the low of the recession we hit 485,000. It took years to get back to 1 million starts(thanks Obama).
We are growing at about 10% per year.
The fact is there is just not enough lumber being produced to meet the current demand in the US. Therefore, we are at record high prices with no end in sight.
The Lumber Broker
So go commodities. They go up and they go down. It’s incredibly high now but will flatten out.
I was talking to a guy who manages a very large lumberyard last week. He said it’s higher than he’s ever seen, but he’s not all that worried. If he was, he wouldn’t be remodeling the store.
The guys with the real challenge are the multi-family framers. (Apartments, condo’s etc) They are bidding and spec’ing projects now that might start in two years. It’s a big guessing game with them.
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