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The historic lumber bubble is over, with price falling 68% from peak

July 26, 2021, 5:45 PM UTC

For the eighth consecutive week, the price that sawmills charge distributors for lumber is down.

Last week, the “cash” market price of lumber fell $90, to $485 per thousand board feet, according to data provided to Fortune by Fastmarkets Random Lengths, an industry trade publication. That’s down 68% since its $1,515 all-time high in late May. That’s the lowest price point for lumber since June 2020.

“The market is probing for a bottom, but it has been elusive so far,” Shawn Church, editor at Fastmarkets Random Lengths, told Fortune. “The market is nearly back down to its historical range.”

Prior to the pandemic, lumber prices usually floated in the $350 to $500 per thousand board feet range. Some in the industry had thought elevated demand during the pandemic and the historic housing shortage might mean prices would never fall back into that range. But here we are.

“Framing lumber is a commodity that rises and falls with even small changes in supply and demand. The forces at play that pushed prices to their historic highs have eased or turned over,” said Church, noting that do-it-yourself home improvement projects were a huge factor in the run-up. “Demand from this sector reportedly has fallen dramatically this season amid record prices and consumers pivoting their spending from home improvement to travel and other pursuits,” he said.

The tumble on the wholesale side is slowly trickling into the aisles of big boxes, however, it could be several more weeks or months before it’s fully marked down. But there is another wildcard: Wildfires are spreading across British Columbia, the North American mecca of lumber. Already, British Columbia forestry titan Canfor, the second largest producer in North America, has announced it will curtail some production at its sawmills as a result of the wildfires. In response, the lumber futures market shot up last week. If futures continue to trade higher, it will eventually push the cash market price back up. Although, industry insiders say another run like we saw in spring 2021 is very unlikely.

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