Lumber Futures Hit Record High $1000 (As Gold Slumps To 7-Month Lows)
As Building Permits explode higher (driven by multi-family units)…
The demand for lumber has soared, sending the building material jumping to an all-time high of $1,004.90 Thursday. Prices have climbed more than 30% this year… as gold sinks to a seven-month low…which is odd given that the rally in lumber (among other commodities) has stoked concerns of inflation bleeding into the home-buying market.
While the onslaught of demand from new construction combined with a boom in home remodeling and construction fueled by stay-home orders, Bloomberg notes that this handicapped producers’ abilities to restock inventories quickly enough, further supporting prices.
Additionally, as we noted during last year’s chaotic surge, it’s not all demand-driven as one builder noted “the explanation they had for us was that COVID-19 shut down the plants that treat the wood, and that finally caught up.”
“The supply chain was screwed up,” said Wilson, the owner of Wilson Construction in Galveston. “Dimension sizes were in limited supplies; even something as simple as a two-by-four-by-twelve Southern yellow pine treated was in extremely short supply.”
Ultimately, the added costs that come from buying supplies will be passed on to homebuyers, said Bill Schick, who sells lumber for Raleigh, North Carolina-based Building Materials and Construction Solutions.
“The price increase gets passed on to the end consumer,” Schick said. “Future homeowners and people remodeling will end up paying the brunt of the price increase.”
But don’t worry, Powell says The Fed has “the tools” to manage inflation… well he is right about one thing! (they do have some tools).
Thu, 02/18/2021 – 10:33