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Thursday, January 23, 2014

Framing Lumber Prices: Moving on Up

by Calculated Risk on 1/23/2014 06:42:00 PM

Here is another graph on framing lumber prices. Early last year lumber prices came close to the housing bubble highs. Then prices started to decline sharply, with prices declined over 25% from the highs by June.

The price increases early last year were due to stronger demand (more housing starts) and supply constraints (framing lumber suppliers were working to bring more capacity online).  My understanding is capacity has increased, but demand has increased too.

Prices have been increasing since June (there is some seasonality to prices).

Prices in early January are at about the same level as last year.

Lumcber PricesClick on graph for larger image in graph gallery.

This graph shows two measures of lumber prices: 1) Framing Lumber from Random Lengths through last week (via NAHB), and 2) CME framing futures.

We will probably see a further increase in prices over the next few months as housing starts increase (Not seasonally adjusted, housing starts usually peak during Q2 of the year).