Lumber prices skyrocketed again after slowly coming back down over the past few months, according to a Wall Street Journal report Sunday.
January lumber futures ended at $1,089.10 per thousand board feet Friday, doubling since mid-November, the Wall Street Journal reported. Analysts believe the price could go even higher throughout the winter.
Lumber futures have nearly doubled since October in an ascent reminiscent of a year ago https://t.co/zj5tyhwcSM
— The Wall Street Journal (@WSJ) December 19, 2021
Futures this past spring for lumber hit a record $1,711.20 per thousand board feet. However, futures dipped to $966.20 this June. Before the pandemic, lumber futures consistently hovered around $400. (RELATED: Lumber Prices Reach Record Heights Causing Home Prices To Surge)
Higher interest rates from the federal reserve could also prohibit buyers from paying the high prices contractors have charged to offset increased material costs, the Wall Street Journal reported. Previous low mortgage rates helped builders to hit high profit margins despite the record prices for lumber.
“Builders think that they’re getting close to the end of a cycle and they’re doing everything they can to get houses going,” said Matt Layman, an analyst and publisher of “Layman’s Lumber Guide,” according to the Wall Street Journal. “They know they can pay $1,500 for two-by-fours. They didn’t like it, but it didn’t hurt them.”
Existing home sales increased 0.8% in October from September while the number of unsold homes decreased by 12% from October 2020 to October 2021.
Median home prices increased by 10% in 78% of the 183 markets in the third quarter of 2021. The increase is due to high demand for homes coupled with a low inventory.