The great lumber bubble of 2021 has popped
After a jaw-dropping rally this spring, lumber prices have come back down to earth as supply increased, speculative trading action cooled and home building demand eased.
Lumber futures tanked more than 40% in June alone, suffering their worst month on record dating back to 1978. The building commodity is down more than 18% in 2021, headed for the first negative first half since 2015.
At their peak on May 7, lumber prices hit an all-time high of $1,670.50 per thousand board feet on a closing basis, which was more than six times higher than their pandemic low in April 2020.
Recently, there have been signs of the housing boom fizzling. Weekly mortgage demand fell 6.9% last week to the lowest level in almost a year and a half. Now, lumber futures prices are on track for their sixth consecutive weekly loss, wiping out all of their 2021 rally. The price fell another 6% on Wednesday to around $710 per thousand board feet.
