Lumber is considered a leading indicator for the health of the construction industry, according to a June 30 report in the Wall Street Journal. But lumber prices are at a four-year low, the futures market for lumber has dropped 27% since March, and customers paying in cash for immediate delivery may even find better deals, since lumber yards are desperate to move unsold inventory. The White House plans to lower housing costs by building 2 million new housing units per year, but the highest mortgage rates in a generation have caused construction permits for new housing units to drop to the lowest rate in four years.
During the pandemic home sales were red hot, and people, stuck in their homes, were remodeling at a record rate. Lumber prices tripled in just the first few months of the lockdown. At the same time sawmills had big profit margins, and there was even a bit of a “gold rush” to open new mills in the South to produce the lucrative Southern yellow pine lumber, which is widely used for fences and decks. But now mills have closed, even in the South, where no mill had closed since the 2008 housing crash. Other mills have reduced shifts, some have gone bankrupt, and all the rest are struggling just to break even.
