Lumber prices falling... a lot

#5
I think Choid is exactly right.
End suppliers will not lower prices in the immediate timeframe due to stock on hand and/or material already on order that they may have paid the higher prices for.

I deal with the same thing in my line of work with warehouses and service centers for steel.
These guys know that quickly falling prices are worse for their business than quickly rising prices. the last thing they want to do is be stuck with 1,000s of tons of steel at $0.75 per lb, only for it to tumble down to $0.60 over the course of a couple of weeks. When that happens they are stuck with high price material they they cannot move.

I would imagine this is similar to wood.

I've been hearing about the falling price of lumber for about a month now. I have not yet noticed any meaningful decrease in price.
 
#8
There's not a lot of incentive to lower the prices if people keep buying. It will find equilibrium, but it's always a struggle. But this is the big debate about inflation, right? How much pricing power is really out there, and in which industries does it exist?
 
#9
Google price elasticity...

Lumber is typically pretty inelastic so prices should fall theoretically faster than other commodities. Typically the more competition there is to produce something that is relatively inexpensive the more sensitive to price changes that product is because the cost to produce is usually pretty much standard across producers. To stay competitive as supply costs decrease, suppliers usually lower prices quickly.

However with that said....it's anyone's guess
 
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#10
I have a couple projects... went to Home Depot... I will be waiting for some time to purchase lumber. Sticker shock for sure. I remember when you could get 8' 2x4's for a buck. ;) I was a LOT younger then...
 
#11
Long term I have no doubt that this will be the case. But long term is made up of all of the short terms, and that is where it is really up for grabs.
 
#12
A Lot younger is right.

But then I remember both gas and cigarettes at $00.18 per gallon or pack.

And when at the sawmill you could get rough cut oak or pine for about the same price.
 
#13
Wait. what? I think you have that backwards. It's very elastic.. How many builders stop building homes due to the prices? How many people on here said they are postponing projects? It's the very definition of elastic. As opposed to something like... say... food?
 
#14

Quite few actually depending on where your building and I know of lots of people myself included postponing a basement remodel specifically due to lumber prices but that's just my laymans opinion.

I agree food is inelastic and lumber is more elastic but my point was I don't think it's as elastic as some might think but it's hard to say where that's going given the amount of stimulus vs real demand in the market. If I thought it was very elastic I would be pretty bullish on the prices staying higher for longer but I don't think they will unless something either A has changed in the supply of lumber or B there is a legit change in demand. There very well could be if there is a ton of pent of demand for lumber and people just say F it and build anyway regardless of price you could very well be correct.
 
#15
That seems to be whats happening. Around here they are building (apts/condos/townhomes/very few single family homes) at record pace. They just pass the cost along. There is a great shortage of available housing...gotta have a place to put all the proletariats, illegals, and imported Muslims, ya know.
 
#16
This is actually really interesting. Here is a chart of the price elasticity of lumber (pine) over four successive one year periods.

  • 2007-2008 = 0.7002
  • 2008-2009 = 0.3069
  • 2009-2010 = 0.2337
  • 2010-2011 = 0.1697
Which would say either that it is inelastic, getting more inelastic, or that it sits in the inelastic range but varies a ton from period to period. Of course, those were not normal years either, and you would expect more elasticity in 07, but still...
 
#17

From my narrow perspective in automotive, the price-increase conversations are just starting for projects that don't already have commodity cost adjustments built into the contracts. So if you're building wiring harnesses you may already be getting paid more because you've indexed your prices to raw copper costs. If you manufacture something like PCBAs then you probably didn't index accordingly (there historically was little reason to do so and no readily-available index to utilize) and thus you're now trying to convince your buyers at the OEs to give you more money for the same part or else you'll violate your contact by not shipping, or that you're getting ready to declare force majeure. You can imagine how these conversations go :ROFLMAO:

So, there's your pricing-power report from a very narrow slice of commerce. I imagine other industries are doing better, judging by the fact that they have successfully pried more money from my pocket (although I did draw the line at $32.99/lb for beef tenderloin at my local big-box grocery store).
 
#23
I was at Home Depot tonight (without a mask) and I thought I'd just walk through the lumber aisles to look at prices. This observation is only for my neck of the woods and your area may be different.

I found PRESSURE TREATED 2x4x8 studs for $3.73 each, while the cheapest I could find regular 2x4x8 lumber was $4.79.

Tell me how on God's green earth can this be? There is so much more work to produce a pressure treated piece of lumber, there should be no way a regular 2x4 is selling for a dollar more.
 
#27
Here too....$3.58 treated. $3.98 fir. Fuck, Ive put a project off for over a year. I bought the treated. First board in over a year. My two favorite hobbies, building shit and shooting. At least one is returning.

7/16 osb is still $37ish....so ill wait on that....doesnt matter everything is treated. LOL.
 
#31

You should go into the inground pool business. People are spending 30% more than the pool is worth and they are signing deals where the contractor won't break ground until September 2022.

Jerk tried to get way too much from me and wouldn't start the pool until Sept of next year. I had another contractor tell me he wasn't taking any more jobs because he's more than 18 month out on starting jobs.

The pool business is absolutely crazy. Got a nearby neighbor that is spending more than $100,000 for his pool and patio.
 
#33
My deck needs to be rebuilt. Still witing for prices to come down.
Want to finish my unfinished attic, same problem.
I dont have any estimates, didnt even waste the time.
 
#34
Look to pay about $4-$5 for each 2x4x8, drywall isn't as bad as it once was but still needs to come down another $2 per sheet. Insulation isn't too bad, but I've only looked at R11 and R19.

Plywood is still high but not it's all time high.

Hopefully, this winter, the prices will bottom out.
 
#35
Here in north Dallas you can't get a basic pool for less than $60K. Wife has decided she must have a pool and doesn't want to wait.
Not sure prices will drop back any time soon
Guess it's cheaper than a nice truck right now. :(
 
#38

Prices will bottom during the next crash. Looking at the pattern of the 2008 downtown, we'd need to go through some serious shit in the next 2-3 months to see a bottom this coming winter. It's possible, but I think it'll take another 6-12 months to get that bad.
 
#39
Exactly this. I'm managing construction of around 14 houses right now. Demand and sales have not slowed. Someone did the math and you can bet lumber companies did too.
 
#41
Definitely part of my reasoning I put an offer down on a house with a pool already there. I coulda gone a bit cheaper with no pool, but then have to spend at least $40k+ on even a basic setup.

And looking at hard maple 2x4"s to make a butcher block kitchen island... Holy shit. For an island that's 30x54" that's $500-700 just on the wood ..depends source, quality, etc.
 
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