Lumber prices are falling, reaching their lowest level so far this year. Lumber fell below $800 per thousand board feet on Monday, and prices are down 30% to date this year.
Builders have blamed rising material costs, including lumber, for skyrocketing prices and project delays in new-home construction. But buyers may not want to celebrate yet, as lumber prices are still up significantly from historical levels. According to National Home Builders Association data, volatile lumber price swings have been blamed for pushing up the average price of a single-family home, causing more than $18,000 of that over the past year.
The latest decrease in lumber prices comes when mortgage rates have risen to their highest levels since 2009 and the costs of buying a home are increasing. The quick increase in mortgage rates has been cited as lessening demand in the homebuilding market, which could be putting downward pressure on lumber prices, John Burns Real Estate Consulting says.
Rick Palacios Jr., director of research at John Burns Real Estate Consulting, said that a recent homebuilder survey showed a slowdown in entry-level housing demand reflected “payment shock,” investors receding slightly, and rising prices pressured prices in the market.
Lumber prices could continue to decline if home prices remain unaffordable and seasonal demand lessens, Market Insider reports. “We expect prices in the long term to be challenged with the affordability and rising interest rate headwinds,” Kyle Little, COO of Sherwood Lumber, told Insider.