Source: Insider —
Lumber prices plunged 66% last year as the once red-hot US housing market faltered – and the commodity’s troubles will likely continue in 2023, according to strategists.
The Federal Reserve’s campaign to quell inflation fueled an unprecedented surge in mortgage rates in the past year, which weighed on homebuilding and the demand for lumber. Average 30-year mortgage rates more than doubled in 2022 to 6.42%, before extending the climb to 6.59% this week.
Westline Capital Strategies president Greg Kuta sees a “treacherous” first half for the lumber market, with the Fed widely expected to raise interest rates further. Vancouver-based commodity research firm Russ Taylor Global expects a brief rally in the new year that will eventually stall due to seasonal factors.
The price of lumber plummeted last year to $400 per 1,000 board feet, from $1,160. It has been a major underperformer among commodities, which were one of 2022’s best-performing asset classes as Russia’s invasion of Ukraine squeezed global supplies of crude oil, natural gas, metals and grain.
“At the start of 2022 we still had a demand-driven, pandemic-fueled housing boom,” Westline Capital’s Kuta told Insider in a recent interview. “Interest rates really flipped the market upside down on its head.”
Nowhere in the article does it let us know what the pre-pandemic price was for lumber… like 2017.
About $400. I’ve followed lumber futures for about 3 years now. Lumber Futures Prices are back down to early 2020.
Exactly! That headline is rediculous.
2 minutes of my life lost reading this treacherously poor article.