by Bill McBride on 12/09/2015 09:48:00 AM
Wednesday, December 09, 2015
Here is another graph on framing lumber prices. Early in 2013 lumber prices came close to the housing bubble highs.
The price increases in early 2013 were due to a surge in demand (more housing starts) and supply constraints (framing lumber suppliers were working to bring more capacity online).
Prices didn't increase as much early in 2014 (more supply, smaller "surge" in demand).
In 2015, even with the pickup in U.S. housing starts, prices are down year-over-year. Note: Multifamily starts do not use as much lumber as single family starts, and there was a surge in multi-family starts.
Overall the decline in prices is probably due to more supply, and less demand from China.
Click on graph for larger image in graph gallery.
This graph shows two measures of lumber prices: 1) Framing Lumber from Random Lengths through November 2015 (via NAHB), and 2) CME framing futures.
Right now Random Lengths prices are down about 15% from a year ago, and CME futures are down around 26% year-over-year.