The great Lumber Bubble of 2021 has popped...... BUT

Posted by Liza Alley on Monday, July 26th, 2021 at 12:50pm

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Lumber prices have certainly come down off their highs earlier in the year. However, as I outline below, it will be a little while before these price reductions start to impact new housing. Stay close to the news here as once demand goes down (which often happens in the fall), we could see the price of newly built homes go down as well. Buyers will want to stay informed as we look for buying opportunities in this hot market.

 

According to CNBC: 

Lumber prices dive more than 40% in June, biggest monthly drop on record 

 

The great lumber bubble of 2021 has popped.

 

 

The building commodity is down more than 18% in 2021, headed for the first negative first half since 2015.

 One of the reasons why lumber prices have started to go down is because:

Americans started to go on vacations again amid the economic reopening instead of taking on renovation and building projects. 

 

 

But how has lumber prices affected new housing starts? Yahoo! Finance mentioned back in June 2021 that lumber is adding $34,000 to the cost of a new home, but with lumber prices going down has this helped the new construction prices? Unfortunately, the answer is “not yet.” According to AZBigMedia

 

Lumber prices have started to slide downwards, but it’s going to take time for the end user to see those savings.  

 

adding that a decrease in demand or increase of supply will need to continue for some time before price reductions happen further down the pipeline. “Futures will come down because investors recognize that production will come back up. But the demand is still there, so there’s no compelling reason for producers to drop prices until they finally see a reduction in orders. And right now, they’re selling everything they can produce,” he says. “There has to be a drop in demand or a big increase in supply before prices start to really come down at our level.”

 

If you’re in the market for a new home, please feel free to contact me HERE with questions about the market. We’ll be watching things like lumber prices along with broader market forces. If you are looking for a new home, we’ll want to be ready to jump in quickly when you are ready! I will continue to update you on both the lumber prices and new housing starts in the coming month's, so don't forget to subscribe 

 

 

 

 

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