Lumber prices are finally falling, here’s why
This is no longer a novelty for the interior design business: the global supply chain is a mess. But amid the historically long delays and arrears, there were brighter headlines last week: Timber prices are falling.
Over the past year, the price of softwood lumber – the type most often used by home builders for framing – has steadily increased, due to a host of factors related to the pandemic. The most obvious culprit is the boom in home renovations and construction, whether it’s an ADU in the backyard or a full-fledged new build. In early May, the price hit a record high of $ 1,711.20 per thousand board feet, the standard metric for lumber (up from $ 412.53 on June 21 of last year and 344.24 $ at the beginning of 2019). To put this in perspective: new homes cost an average of $ 34,000 more due to the wood market, reports Forbes.
This week, however, the market opened at a price of $ 897.90 per thousand board feet, down more than 45% from the May high. “The rapid decline suggests a bubble that has burst, and the question is how low wood prices will come down”, written commodity reporter Ryan dezember for The Wall Street Journal. If you ask Jean Dupra, co-founder of Rochester, New York-based hardwood flooring company Revel Woods, there’s still some way to go before it gets back to normal: it’s more like a falling fever.
Many in the lumber industry believed the drop was inevitable, but looking at the trend over the past year and a half, the lumber price was an indicator of overall market volatility. Like many other businesses, when the pandemic struck, factories closed and dealers sold their inventory. Shortly after easing the closures, the real estate boom arrived – with nowhere to go, Americans collectively sensed a keen interest in the comforts of home, and many funneled that interest into home improvement projects, while that others took advantage of low mortgage rates in the suburbs. and still others have started to build outdoor spaces. In a flash, plywood and lumber were ripped from the shelves, adding fuel to a frenzied fire of demand in the United States. By the time the sawmills resumed operations, however, demand was so strong that supply couldn’t keep up – and as a result, prices surged. Now that the prices are down, what does this mean for designers?
It depends on the type of project they are working on. The two main categories of wood are softwoods and hardwoods. Typically, softwood tends to signify new construction, while hardwood is typically used in renovations. And while there is growing optimism in the softwood lumber market, it’s important to note that analysts are focusing on softwood lumber.
“Softwood prices are starting to drop,” says Dupra. “Hardwood prices have not. But generally speaking, where softwood goes, hardwood follows, so that bodes well for the future on the hardwood side. And while softwood is more attractive to those on Wall Street, design projects will be affected by the prices of both types. “We see no evidence that [the price of hardwood] grave ”, says Don finkell from Dalton, GA, EF Floors & Design. “Hardwood prices go up and down more slowly, but we’ve seen the same movement, but not as fast, as softwood prices go up. We have seen a steady increase in hardwood prices over the past 18 months, and 18 months ago we were probably at the bottom with fairly cheap prices – most have gone up by 50% or more.
Even if the market breathes a sigh of relief, designers are unlikely to feel the change immediately. For those working on new versions, lead times will be shorter and budgets may stretch a bit longer, leaving more money for design; for others specifying bespoke hardwood furniture and flooring, the sky has not yet cleared. On the market side, the rise in commodity prices has left analysts worried about inflation, reports Bloomberg, but the downward variation in prices means the supply is on the rise, and while the lumber industry is still far from the status quo, things are moving in the right direction.
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