Lumber prices have slipped by over 50% from their level seen in March, amid the continuous increase in interest rates.
- Futures scheduled for delivery in July closed Friday at $695.10 per thousand board feet, reflecting a 52% decline from the high recorded in early March. Random Lengths’ framing composite index also fell 12% to $794 from $1,334 in March.
- Random Lengths said buying activity has weakened, piling up at mills which are cutting down prices. It also noted that triple-digit discounts are now the norm rather than the exception.
- Analysts believe there is not that much stocking up as seen in the past year, when dealers and builders found difficulties in meeting demand, and hoarded supplies when available.
- The decline comes amid the increase in interest rates. The Federal Reserve implemented another hike this month, with more tightening expected in the short term to ease the inflationary uptick.
Mortgage rates have also increased, while sales of newly-built homes slipped to a one-year low in April.
XHB is down 0.03%, while ITB is up 0.39% after hours.
Source: WSJ