"They're probably sensing consumers are going to be smarter this year and stop buying"
Lumber, one of the hottest commodities on the planet, is still short in supply, but prices are tumbling.
Lumber futures fell to $1,053 per thousand board feet on the Chicago Mercantile Exchange for the seventh day in a row on Tuesday. As Bloomberg reported, the cool-off period – the longest since July – signals that sky-high costs and supply constraints will continue to delay projects and may even drive down demand.
“They’re probably sensing consumers are going to be smarter this year and stop buying,” said Russ Taylor, president of Vancouver-based Russ Taylor Global. “The sticker shock is going to hit consumers earlier this year.”
Read more: How falling lumber prices impact US home buyers
A report from the National Association of Home Builders showed that staggering lumber prices have added $20,000 to an average home price. In addition, NAHB’s builder outlook in the market for newly constructed single-family homes also dipped one point lower in January, as typical single-family construction times continue to drag on. The industry group pointed to labor shortages and disruption in shipment from Canada to the US as the cause of delays and cancellations.
“The starter-home market has seemingly vanished,” David Logan, director of tax and trade policy analysis at NAHB, said in a phone interview with Bloomberg. “We’ve seen affordable housing projects canceled.”
“Policymakers need to take action to fix supply chains,” NAHB chairman Chuck Fowke added. “Obtaining a new softwood lumber agreement with Canada and reducing tariffs is an excellent place to start.”