Lumber prices traded lower again Friday amid continued signs of a housing-market cooldown.
Prices fell as much as 5%, to $474 per thousand board foot.
Lumber is extending losses that hit a new record low for the year earlier in the week.
Lumber plummeted Friday, extending losses that marked a new 2022 low just two days ago.
Prices fell sharply, sinking as much as 5% to $475 per thousand board feet, as the housing market showed continued signs of cooling. The construction essential is now down nearly 70% from its May 2021 peak, having fallen 56% year-to-date.
Home prices are starting to show signs of cooling amid concerns over a broader economic recession. Recent data showed new home sales in the month of June fell to their lowest level since April 2020.
Some experts — including LPL chief economist Jeffrey Roach — think the declines will continue, citing the Federal Reserve’s ongoing interest-rate hikes. The central bank is trying to address inflation that sits and more than 40-year highs by making borrowing much more expensive. The housing market — and by extension lumber — is especially sensitive to these increases, leaving them vulnerable.
“Conventional wisdom holds that the housing market, given its interest rate sensitivity, will be the first to go as the Fed tightens,” Tracy Chen, portfolio manager at Brandywine Global wrote in a note viewed by Insider.
The latest lumber declines are good news for homebuyers who previously struggled to find affordable options due to rising home prices and limited supply of homes for sale. The fact that mortgage rates have also come down nearly 50 basis points from their June peak is also a positive factor for buyers.