Posted on 06/15/2021 7:09:01 PM PDT by dynachrome
Lumber prices are falling back to Earth.
Futures for July delivery ended Tuesday at $1,009.90 per thousand board feet, down 41% from the record of $1,711.20 reached in early May. Futures have declined 14 of the past 16 trading days.
Cash lumber prices are also crashing. Pricing service Random Lengths said Friday that its framing composite index, which tracks on-the-spot sales, dropped $122 to $1,324, its biggest ever weekly decline. The pullback came just six weeks after the index rose $124 during the first week of May, its most on record. Random Lengths described a chaotic rout in which sawmill managers struggled to provide customers with price quotes. It said late Tuesday that its index had dropped another $114, to $1,210.
Economists and investors have wondered if sky-high prices for wood products would doom the booming housing market. Builders raised home prices and many stopped selling houses before the studs were installed, lest they misjudge costs and sell too cheaply. Lumber became central to the inflation debate: whether a period of runaway inflation was afoot or high prices were temporary shocks that would ease as the economy moved further from lockdown.
(Excerpt) Read more at wsj.com ...
“That said, what I stated holds true.”
Source?
MUST have a fixed price contact when building a home. Cost plus contract = great way to get screwed while the builder abritrages with the customer being the loser.
No problem, as I already have a fence, and thought a new one would be nice. I don’t make a habit of buying stuff at top dollar. If it don’t happen, it don’t happen.☺
Those prices haven’t budged because they bought in at May prices and they must run through that inventory.
Not anybody who had common sense.
First thing. Do I really need that deck at this time?
Second. If I wait to replace it, where can I get wholesale lumber at low prices.
I wanted to do a couple projects. Dont need to do them now and they can wait till fall, or another year.
I wonder if they’d be just as quick to drop the prices too?
Karate schools can now breathe a sigh of relief.
You are correct on home construction. It is surprising however that in large commercial some of the best fee limitation and cost savings is for “Cost-plus-a-fee with a Guaranteed Maximum Price. In 47 years and running hundreds of millions in projects, I made some of my biggest profits on lump sum contracts.
The rest is behind a paywall.
You mean Tobin's Q and the Efficient Frontier etc are behind a paywall?
Same boat here. I ran a family custom home (and spec) biz for a decade a d we made the most money on fixed priced contracts. There’s a premium for predictability and typically had a dozen or so homes going at once and were able to get economies on contacts with subs and fix those prices, etc. You know how more works.
Sale of our house closes June 25th...whew
More good news I hope the hoarders gag on what they’ve got
Come back after you understand microeconomics.
Well, if they can’t get top dollar for hoarded lumber, they can always make it into toilet paper.
“Source?” NYSE. Commodities Market reports.
It won’t go back to pre covid prices. It will bottom at about $800/1000 board feet. The run up enabled them to establish a new floor price, which is over twice what it started at.
7/16 OSB at Lowes is still $52.00 a sheet. It has not come down at all.
Home builders do not shop at Lowes.
They do not have what they use.
They are a DIY supplier.
My cost plus projects were notable for superior performance in the quality and cost savings. I had a number of projects where the cost savings were so exemplary that I earned my company extra money from a very happy customer. Once I was awarded two new shopping centers during a financial closeout review. I also was audited by a financial team from hard buyer Wal-Mart. They found only $18.60 in Six Million that they did not agree with. It was in their favor and they gave us a complimentary letter and a check for $18.60 on the spot.
With a history like that I negotiated a lot of Fee-Basis work.
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