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Lumber prices are down 74%. But this could drive them up again

September 2, 2021, 8:43 PM UTC

On May 28, the wholesale price of lumber peaked at $1,515 per thousand board feet. Since that date, framing lumber prices have fallen for 13 consecutive weeks—hitting $389 on Friday.

That staggering 74% drop on the wholesale side is finally getting marked down on the retail side. Big-box stores like Home Depot and Menards are cutting their lumber prices—and fast.

That’s great news for do-it-yourselfers. Among DIYers who’ve delayed a project this year owing to lumber prices, 65% say they’re planning to restart it soon now that prices are back down, according to an Expertise.com survey conducted in August.

But another surge on the demand side, could erase some of the discounts.

The lumber bubble was popped by simple economics: Prices got too high, and buyers balked. But largely, that pullback came on the DIYer side—not among homebuilders. In March, 57% of building material dealers rated their DIY demand as “high,” according to a recurring survey conducted by John Burns Real Estate Consulting. By July, just 3% of those building material dealers rated their DIY buyer demand as high.

Now, if those sidelined DIYers rush back to Lowe’s, it could send prices shooting up again.

Don’t underestimate these DIYers. When it comes to lumber consumption, the repair and remodeling segment is bigger than the homebuilding side of the market, according to Fastmarkets RISI data.

“It’s definitely possible that a return of DIYers to the market contributes to a bounce in prices. At a minimum, it should help firm the cash market, which has continued to trickle down in recent weeks,” says Dustin Jalbert, a senior economist at Fastmarkets RISI who covers the lumber market.

That’s not the only headwind coming for lumber. A bad wildfire season in British Columbia has caused some sawmills to temporarily halt production. While in the U.S. South, the current hurricane season now threatens Southern yellow pine production. Additionally, the U.S. government is still considering increasing Canadian lumber duties this year from 9% to 18%.

“I think there will be a pretty good bounce from current levels in the cash market [this fall]. Not quite double though. But [it’s] hard to say how high it will go,” Jalbert says.

Expertise.com’s survey included more than 800 U.S. adults who considered starting or did start a home improvement project this year.

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