Lumber Prices Fall To A New Low This Year As Reality Sets In That The Housing Market Is 'Going Back To Normal'

• Lumber prices continued their descent on Wednesday, August 3, 2022, falling as much as 5% to a new 2022 low of $495 per thousand board feet. The essential building commodity has seen a wild ride since the start of the COVID-19 pandemic, with prices peaking at a record high of $1,733 per thousand board feet as demand for homes picked up and supply chain woes plagued sawmills across Canada.
• Since lumber's May 2021 peak, it's been nothing but downhill for the commodity, with a peak-to-trough decline of 71%. The weakness accelerated in 2022 as higher mortgage rates helped cool down the booming housing market, which fueled demand for lumber as homebuilders sought to cash in on the demand spike.
• Lumber prices continuing to downtrend remain good news for up-and-coming home buyers that have been boxed out of the market due to rising home prices and a limited supply of homes for sale. The recent surge in mortgage rates hasn't helped with affordability, but the average 30-year fixed mortgage rate has fallen more than 50 basis points from its peak in June, offering some relief.
• Ultimately, the housing market is on its way back to normal, and that means lumber prices are likely to remain back in the normal trading range before 2020 of $200-$600 per thousand board feet.

(Source: Insider)