After a massive run-up last Summer and periodic spikes since then, lumber prices headed back to earth in mid-June.
Yet, the National Association of Home Builders says lumber prices are still higher than they appear. While data from Random Lengths shows that the cost of framing lumber has dropped roughly 50% over the past seven weeks, the association says prices paid by builders have declined by a fraction of that amount. In fact, it says the prices quoted to builders are at record highs.
NAHB cites the supply chain as a significant reason for that disconnect. The issues are dealers' inventory carrying costs and potentially significant differences between the price at which inventory is bought and sold. Retailers and wholesalers try to avoid losing money by buying high and selling low.
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Leslie Shaver
Les Shaver has been covering commercial and residential real estate for almost 20 years. His work has appeared in Multifamily Executive, Builder, units, Arlington Magazine in addition to GlobeSt.com and Real Estate Forum.
