Lumber prices are down 68% — but there’s a catch

For the ninth consecutive week, the price that sawmills charge distributors is down. On Friday, that “cash” market price fell to $479 per thousand board feet, according to data provided to Fortune by Fastmarkets Random Lengths, an industry trade publication. That means the price is down 68% since its $1,515 all-time high in late May and is lower now than its peak 2018 price.

But there’s a catch: While the price on the wholesale side is back to 2018 levels, that hasn’t happened yet on the retail side. The price tag of two-by-fours in the aisles of big-box stores like Home Depot and Lowe’s is falling, but nothing close to a 68% markdown.

“They have the pricing power. They don’t have to lower their price,” Ashley Boeckholt, cofounder of MaterialsXchange, tells Fortune. Many of those retailers and lumberyards, he says, bought wood during the historic spring run and are hesitant to offload inventory below that price. But at some point, the wholesale drop will get passed onto retail.

Amid the historic run this spring, Fortune told readers that economic theory pointed to an eventual bursting of the lumber bubble: Either sky-high prices would incentivize suppliers to up production, or exorbitant prices would turn off enough buyers that prices would fall. The latter is ultimately what happened, as some builders and DIYers balked at high prices. Similarly, simple economics points to lower wholesale prices trickling down to big boxes: To gain an edge with customers, some retailers will pass on more lumber savings, which will force their competitors to follow suit.

That’s exactly what Boeckholt, who has worked in the industry since the early ’90s, foresees. His advice? Lumber buyers should aggressively comparison shop and maybe even consider traveling to stores that are further away for better deals.

Or DIYers can just wait it out.

Michael Goodman, director of specialty products at Sherwood Lumber, told Fortune last month that each dip in the wholesale cash price will take “about 60 to 90 days to get into the market.” If that’s the case, current wholesale prices might not be fully passed on to shoppers until late September or October.