Lumber Prices Move Sharply Higher on Rising Demand and Supply Constraints
Rising demand stemming from a surge of do-it-yourself projects from consumers working at home coupled with restricted supply due to lumber mills operating at a diminished capacity have led to a recent upsurge in lumber prices. Prices topped $400 per thousand board feet in mid-May. Framing lumber prices have increased 13% since May 1 — the largest two-week increase in over a decade and the first increase greater than 10% since the start of the U.S.-Canada Softwood Lumber Dispute in early 2017. This recent increase in lumber prices comes at a time when the government reported backward-looking data that shows building material prices posted a record decline in April — during the height of the pandemic and before many states rescinded stay-at-home orders and began phased re-openings of local economies. Related factors driving this recent increase in lumber prices include:
- Rising demand from big box retailers — driven by do-it-yourself activity and the fact that building supply stores have been designated as "essential businesses" across the nation — has limited the supply available to traders, wholesalers and distributors; and
- Slowing mill production as home building activity dropped sharply during the early weeks of the outbreak.