Softwood Lumber Prices Hit 2-Year High, Up +50% Since April — NAHB

Softwood Lumber Prices Hit 2-Year High, Up +50% Since April — NAHB

Western Spruce-Pine-FIr KD 2x4 #2&Btr prices JULY 2020
madisonsreport.com

On July 10 the US National Association of Home Builders explained current conditions with the North American softwood lumber market.

Western Spruce-Pine-FIr KD 2x4 #2&Btr prices JULY 2020
madisonsreport.com

The primary drivers of the price increase include:

  • Sawmills closed in the spring due to stay-at-home and social distancing measures enacted by state and local governments.
  • When prices fell between March and April as a result of the COVID-19 pandemic, sawmills projected that housing would be adversely affected and therefore anticipated a large drop in demand. Accordingly, sawmills that remained operational substantially decreased capacity utilization.
  • Producers did not anticipate the massive uptick in demand from do-it-yourselfers (DIY) and big box retailers during the pandemic.
  • Housing weathered the storm much better than most anticipated.
  • DIY demand has not abated much as states reopen and construction demand has far surpassed lumber mills’ projections.
Softwood Lumber Movers & Shakers: green and KD Construction Framing Dimension Lumber Prices JULY 2020
madisonsreport.com

The combination of all of these factors has caused a dislocation of the usual supply/demand equilibrium, detailed NAHB. Suppliers continue to catch up to orders to the point that, in some cases, builders and traders are being forced to place orders without a delivery date or price.
Sawmills were taking orders to the end of July back in early-June, which may have been the driver of the large increase in lumber futures over the past few weeks.

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