Lumber Prices Today: Will They Rise Again in Upcoming Homebuilding Season?


Besides the ongoing concerns over the current situation of the housing industry, lumber prices today are once again declining.

Contrast to January state, lumber prices is continuously falling

The price of the crucial building material has dropped 24% over the past nine days, or 3%, to $392 per thousand board feet, according to lumber futures, which on Wednesday dropped to that level.

Lumber’s strength, which was seen in January when the commodity climbed 37%, has reversed itself with a 25% price decrease so far in February.

Lumber outlook as upcoming homebuilding season

But, as the busy homebuilding season picks up steam, experts at Raymond James predict a turnaround in the lumber market in the upcoming months. Because of this and low stocks, lumber prices may rise once again to over $500 for every thousand board feet.

“We gathered significant new data from homebuilders suggesting a much stronger than expected January demand response from homebuyers, which has in turn led several builders to embrace strategic operating shifts that will maintain higher production levels of unsold spec homes this spring,” Raymond James analyst Buck Horne wrote in a note.

Data shows lumber has reached bottom

Lumber Prices Today

Raymond James saw the data which suggests that lumber prices are probably reach their bottom. 

“Combining this confirmation of significant pent-up housing demand, a positive inflection in production plans among homebuilders, and a parade of recent capacity curtailments from Canadian lumber producers – we believe the seasonal low for cash lumber prices has already been made,” Horne said.

According to the note, conversations between Horne and industry “”suggest that available lumber inventory for quick delivery remains extremely lean in the supply chain.” 

Thus, Horne warned that “many lumber suppliers could be caught flat-footed” if the robust homebuilders’ optimism exhibited in January continues to be sustained. He said that such a situation would pave the way for another seasonal uptick in lumber prices.

And according to Raymond James, the lumber industry could see growth well into 2024. 

Raymond James said that lumber futures may increase to $500 per thousand board feet in the second half of the year and then soar to $525 in 2024 as an indication of how high lumber prices could go. That indicates a possible increase from current levels of up to 34%.

U.S. housing starts have further to fall

Jalbert anticipates a double-digit decline in house starts in the US this year. Because of “plummeting home affordability,” which is brought on by high mortgage rates and high home prices, new home sales in the U.S. have decreased by 20–30% since the beginning of last year. 

The oversupply is made even worse by a combination of cooling demand and a historically high number of homes now under construction, which results in a flood of “shadow” inventory and a decline in housing starts.

Although a decline in house starts this year is largely expected, the precise amount varies. Jalbert believes his prediction of a 13% decline in housing starts is on the optimistic side. 

The situation for single-family houses, which he forecasts would decline by 16% in 2023 as mortgage rates remain at or near 6%, is rather more gloomy. Jalbert forecasts a 7% decline in multifamily starts this year.

Inflation— and mortgage rates—will drop significantly in 2023

According to Dustin Jalbert, senior economist of wood products at Fastmarkets, inflation will sharply decline in the second half of this year, moving closer to the Federal Reserve’s 2% target. With that, the Fed may decide to cease raising interest rates, which would cause mortgage rates to fall and resuscitate the housing market.

In fact, both home builders and lumber manufacturers would appreciate that.

Record volatility in lumber prices since 2020 is over

Jalbert supposed that the market’s ongoing price volatility in relation to lumber is already over as a result of the anticipated drop in demand. The record volatility witnessed since the spring of 2020 “appears to now be in the rearview mirror” even if limited inventory can raise lumber prices since it cannot do so without demand.


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