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Information and news on the construction sectorLumber Price Are Falling: What to Know
If you've undertaken home renovations this year, you'll be aware that the price of lumber has soared to record highs due to the economic upheaval caused by the COVID-19 pandemic.
However, the situation seems to be about to change and bring about a much-awaited price reduction for consumers, which is excellent news. So here's without further ado everything you need to know about it!
The current decline in the price of lumber comes at a time when the current demand for building materials is running out of steam. While renovation projects have enjoyed impressive popularity during the pandemic due to a certain abundance of time and money on the part of homeowners to carry them out, the economic recovery is reducing the scale of these resources for many people. As a result, as consumer demand for this material is currently lower, so is its price.
This reminds us of the extent to which the interplay of supply and demand has a decisive role in all sectors of our economy, the construction sector being no exception.
It should be noted that this drop in prices will not make it possible to find (at least for the time being) rates identical to those found before the start of the pandemic in spring 2020. While at the height of the crisis the price of wood could reach $1,800 per thousand feet board measure (1 board foot measure being equivalent to 1 board of 12 inches x 12 inches x 1 inches thick), this tariff has now dropped to about $1,200 for a thousand feet board measure.
While it is estimated that this price will probably go down to 800$ per thousand feet board measure, others suggest that the actual drop will be up to 5 to 20%. In this regard, it is worth mentioning the Pribec index, which illustrates the price of lumber. Although the latter would have dropped by 23% to reach the rate mentioned above, it is still much higher than the price displayed by this same index in 2019, i.e. about $474 per thousand feet board measure. By the same fact, it is important to point out that the NASDAQ index for this material would have decreased by 45% between the beginning of May and mid-June.
It will still take a little patience before this price drop materializes in hardware stores. Why is that? Quite simply because the wood already in the store was bought at a higher price by the various retailers. Consequently, the latter will not be able to sell it below a certain price without incurring costly financial losses. As soon as this inventory is liquidated, the path to more reasonable prices will begin.
Since many countries are involved in the softwood lumber market, the rise and fall in prices are therefore greatly influenced by what happens outside our borders. Due to the interrelationship of the different national markets, the result is a certain instability at the international level. As a result, it is difficult to predict how the situation will develop with certainty.
While consumers will be happy to pay less for their lumber, so will sawmills. Indeed, they seem particularly interested in the return of some stability in order to be able to better forecast their budget, as evidenced by the words of Michel Vincent, an economist at the Conseil de l'industrie forestière du Québec.
At the same time, he points out that sawmills have increased their prices during the pandemic in order to make the rest of the supply chain (workers, suppliers and forest producers) benefit from this increase. It remains to be seen whether the planned price reduction will allow all these players in the construction industry to generate a profit margin that meets their expectations and whether this will give owners a new taste for realizing their renovation projects.
If the drop in the price of lumber is good news, be aware that other products and materials offered in hardware will also be available at more affordable prices. In the coming weeks, it is, therefore, possible to expect a drop of about 15 to 30% on various items, especially those intended for landscaping projects.
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Last modified 2023-11-07
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