Lumber not yet cheap, but may be getting there

August 5, 2021

In July 2020, the price for 2x4 lumber for Ontario home builders was $1,242 per thousand board feet. On July 30, 2021, it was $690. In Western Canada, the price of 2x4s has fallen from $961 to $500, according to data from Madison Lumber.
At the peak in 2020, lumber futures were trading as high as US$1,733.50 per thousand board feet—more than quadruple the level of 2019. At present, lumber for September delivery is around US$712.00 per thousand board feet.
And this despite continued high housing starts across North America and massive wildfires in British Columbia and much of the western United States that have reduced lumber supply and access.
The current price level remains historically high, however. Since the 1990s, lumber futures have mostly traded between US$200 to US$400 per thousand board feet, with the exception of 2018 when they shot above US$600, according to Madison Lumber data.
Today’s lumber prices are US$485—the lowest in three year.
“Over the past two months, [there has been] a lot of pushback from the customers where they’re holding off on buying in the hopes that the lumber prices will go down – a very successful effort on their part,” said Keta Kosman, publisher of Madison’s Lumber Reporter, in her mid-summer 2021 update video.
And prices could fall further in the face of price resistance.
A recent analysis by BMO predicts that lumber prices will continue to tumble until 2020, due in part to affordability concerns.
“Household wallets are not unlimited and, at some point, demand could shrink amid a reluctance to shell out extra dough for the same studs and sheathing,” the BMO report noted.