When the price of lumber got too out of hand and crested at more than $1,515/thousand board feet, buyers who could afford to wait stopped buying, sawmills increased production to meet pent-up demand and prices fell to $389 by August.
The relief was short-lived, however, as prices are now back to $1,111, a 186% increase over August.
This time around, the cause is not poor logistics planning and demand estimations thrown off by the pandemic. Wildfires in the northwestern U.S. and British Columbia forced production to scale back, and mudslides, flooding and record rains have slowed shipments through the Port of Vancouver.
The supply decrease and the insatiable materials demand from builders have spiked prices upward again.
In addition, buyers increased their orders last year to ensure they could get enough supply as it became available, reigniting upward pressure on output and prices. Few experts are hazarding guesses as to when prices will fall again, but many are predicting that higher interest and mortgage rates due to government money policy could slow the housing market and its associated building.
When and how much those impacts may take hold and relieve supply and demand pressures are anyone’s guess at this point. Given a 4-million-unit backlog in home demand, it is safe to assume it will not happen in the near term. (Source)