Lumber Slides With Homebuilder Confidence Slipping From High
(Bloomberg) -- Lumber futures tumbled after touching a record high on Tuesday, with U.S. homebuilder confidence slipping from a record.
The National Association of Home Builders/Wells Fargo Housing Market Index dropped to 86 in December, still marking the second-highest level since the index began in 2008, from a record 90 in November.
“Housing demand is strong entering 2021, however the coming year will see housing affordability challenges as inventory remains low and construction costs are rising,” said Chuck Fowke, the NAHB’s chairman.
Futures in Chicago soared Tuesday to an intraday record $845 per thousand board feet, defying what is typically a seasonal lull during the North American winter, after strong home building and remodeling during the pandemic surprised the industry and mills were unable to keep up with demand. Prices slipped as much as 3.9% Wednesday.
“Overall sales eased yesterday as the impact of less availability of lumber was felt,” William Giguere, who buys and sells eastern spruce with mills for Sherwood Lumber in Massachusetts, said in a note. “The added pressure on distributors to come up with material has created voids, limiting options to customers. Meanwhile, prices continued to move higher with some mill order files pushing out into February.”
Lumber supplies are tighter than they were in the summer, and Western spruce, pine and fir orders have been pushed to mid-January and later with mills sharply raising price quotes, CIBC Capital Markets analyst Hamir Patel said in a Dec. 15 note, citing Random Lengths trade magazine.
“Some producers reportedly looked for triple-digit premiums on higher demand products,” Patel wrote. “Mild weather continued to support construction activity and contractors struggled to cover needs. Some distributors and co-ops reportedly had ‘hundreds of orders’ that they could not deliver on.”
©2020 Bloomberg L.P.