How have lumber prices changed in March 2022?
Over the past two years, lumber prices have been extremely volatile. Supply and mobility restrictions and the unexpected spike in real estate demand have led to a rollercoaster of price changes.
Lumber prices quickly crossed the $1,000 mark early in the pandemic, and while the situation eased after the massive bubble in May 2021, the start of 2022 saw prices rise once again.
So, with everything that has happened, here’s a lumber prices update for March 2022. Learn more about what prices have been like this month and how they are predicted to change moving forward. It can give you an idea of whether you should stock up on lumber now or monitor prices to see if they ease.
March 2022: Lumber Prices
The lumber prices update for March 2022 shows that many uncertainties remain in the market. Lumber prices have been volatile in 2022, owing to many external factors, like increased tariffs, floods in British Columbia, and supply chain disruptions. The Russia-Ukraine crisis has contributed to another surge in the lumber market.
Early in March, lumber futures spiked to $1,452, which trailed just behind the $1,711 peak last May. The commodities market was strained after Russian troops invaded Ukraine.
Beyond lumber, other goods like oil and metal have also seen massive price increases. Unfortunately, the pressure placed on Western governments to impose sanctions on Russian goods may cause further price disruptions moving forward.
The early March peak has since cooled down for a different reason—housing. As of March 23, lumber futures have gone down to $1,054, primarily because of the slowing real estate market. While housing demand is still higher than before the pandemic, new sales have declined due to increasing mortgage rates and house prices that discouraged first-time buyers.
The good news is that lumber prices declined in the latter part of the month due to the slowdown in housing sales. However, prices are still significantly higher than pre-pandemic rates, given that they remain above the $1,000 threshold.
Outlook for Future Lumber Prices
It can be hard to say where the market is going, given the latest lumber prices update. However, based on recent events, future lumber prices will depend significantly on how the Russian-Ukraine conflict and the housing market unfold in the coming months this year.
Early in the year, the market took a hit from shipping delays caused by the British Columbia floods and supply issues resulting from the wildfires and mountain beetle issues. Given that Canada is the main supplier of softwood lumber in the United States, these calamities have led to shortages, causing prices to go up.
Relating this to the current situation, Russia is also known as one of the world’s largest exporters of softwood. Thus, imposing sanctions to ban these exports would mean cutting off another major supply source, further aggravating the lumber shortage and increasing prices.
According to the National Association of Homebuilders, the surge in lumber prices led to an increase of $18,600 for every newly built home. It has put a huge strain on buyers’ finances, especially now that the average mortgage rates have risen to over 4%. In effect, new home sales for single-family homes have been declining and missing initial forecasts.
If the current trend persists, the price of lumber may also go down as the housing market moves from excess demand to a more stable state. According to chief economist Ian Shepherdson, existing home sales may drop by 25%, going from 6.02 million in February to 4.5 million in the summer.
Shepherdson predicts that the market is already in the early stages of a downshift, as seen in the massive reduction in mortgage applications.
If this proves true, lumber prices may continue to fall as housing inventory stabilizes. However, nothing is set in stone now as there is always the possibility that demand picks up again when house prices go down.
Get Lumber from Tampa’s Most Trusted Company
Given the volatility of the recent lumber prices update, it is more important than ever to buy your wood from a trusted lumber company in Tampa. If you have any home improvement projects planned for the year, Peninsular Lumber can help you source all your materials.
Contact us at 813-875-8805 and let us know what type of lumber you need.