Good afternoon —
Until last year I had never paid attention to lumber. Trees, yes; lumber, no. Now, I follow a bunch of interesting people on Twitter (@LumberTrading for instance) and keep a close eye on lumber supply chains. And I'm not the only one! Volatile lumber costs have had a huge impact on housing over the last 15 months and it looks like we're not out of the woods yet, even though lumber prices plunged this month.
Our latest lumber story breaks down the problem:
The price of lumber packages quoted to builders are still high due to the dealers' inventory carrying costs, according to David Logan, NAHB senior economist and director of tax and trade policy analysis. And mill lumber prices, specifically, must "substantially" decrease for an extended period of time, Logan said, for builders to see price relief…
Logan added that retailers — lumber yards, usually — have less buying power than wholesalers have selling power. As a result, inventory costs tend to increase in step with the market prices, and the higher costs are then passed on to builders in order to maintain positive margins.
And as the story notes, not all types of lumber have seen price drops.
"Although the cash price of framing lumber has fallen dramatically in recent weeks, the same can't be said of other major parts of home construction. The average price of oriented strand board remains 500% greater, for example, versus April of 2020."
Read the whole thing here, and then enjoy your weekend. (Which, if you're anything like me, might include checking the price of different kinds of boards at Home Depot and nodding wisely like you have anything figured out.)
Until Monday —
Sarah Wheeler
HousingWire Editor in Chief
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