Are Lumber Prices Going Down in 2022?

If there’s one word to describe lumber prices since about 2020, it’s volatile. For those looking to build or renovate a house — and for contractors and DIY champions across the nation — it has been a wild ride. The only question that matters now is this: Are lumber prices going down?

The answer is more complex than meets the eye, especially for providers of specialty woods like ourselves. But before we talk about us, let’s dig into the details.

COVID-19 Pandemic Influences

The global pandemic set off a perfect storm of consequences in nearly every industry. Some businesses, like Amazon and DoorDash, saw unprecedented growth during the lockdowns. Other concerns, like lumber commodities, aren’t so easy to calculate. 

Here are the core reasons lumber prices went through the roof:

• COVID-19 shutdowns disrupted steady commodity production as mills shuttered
• With unprecedented time at home, more people decided to make improvements or buy new houses
• Remote work and the Great Resignation disrupted the status quo and spurred massive demand for new homes (or home offices) nationwide
• Interest rates and inflation, coupled with natural disasters, made commodities even more volatile

The U.S. economy is a complicated machine with many running parts, and it has been put through the wringer in the past few years. Lumber products have been in a perfect storm because of the instability wrought by pandemic restrictions and other market forces.

Supply Chain Disruptions

The pandemic produced a lot of wrinkles in the global supply chain, not least of which was severe instability in lumber prices. These supply chain disruptions were augmented by both flooding and wildfires, especially in British Columbia, which exports up to 50% of its annual production to the U.S.

When limited supply is confronted with seemingly boundless demand, prices will skyrocket. That’s what happened in the past two years. The normal trading range for lumber is from $200 to $600 per thousand board feet. All of these disruptions and instabilities spurred lumber prices to a peak of $1,733 per thousand board feet.

Lumber Costs in 2022

Are lumber prices going down? For most: Absolutely! A recent report showed that same metric, the price per thousand board feet, down more than 70% at $495 in 2022. In fact, lumber has been trending downward since its peak in May of 2021. 

Experts offer reassurance that things are stabilizing, and the downward trend is being managed carefully by those responsible. The U.S. is not into recession territory yet. Overall, current economic conditions are being billed as the Great Reset, or a stabilizing phenomenon in the marketplace. 

There are still shortages of certain lumber products, such as eastern white pine. The good news is that there are alternatives, and they’re not only readily available, but they also perform better. 

Mills are managing output to prevent a glutted market. The Federal Reserve is carefully adjusting interest rates, working to both manage inflation and keep recession at bay. 

Meanwhile, the average homebuyer or DIY enthusiast can rejoice that, for the most part, there are great deals to be had on lumber right now. It could very well be that there’s no better time than now to finally begin your new deck — or even get prequalified for a new home.

Building Industry Forecast

Why are lumber prices going down? As mentioned, things are beginning to normalize across the board:

• Production and demand are reaching parity
• Lockdown supply chain event effects have begun to settle
• Higher interest rates are slowing new construction to a sustainable pace

Look for normalized activity in the building materials marketplace as both supply and demand forces recede to healthier levels — especially as it concerns lumber, which you can find at a discount right now. From the May 2021 peak, lumber prices are down more than 70%. Would you pass up a 70% off sale on anything? 

Waiting for the price to continue to drop may end in disappointment. As building activity slows for winter, producers will most likely throttle production, too. 

For most, it is a good time to buy lumber. The current price of $495 per thousand board feet is well within the normal range of $200 to $600.

The Notable Exception

These new developments in the lumber industry are great for folks looking to purchase commodity lumber such as framing material, pressure treated lumber, and plywood. The unfortunate reality for some, however, is that prices have yet to stabilize for Specialty woods.

Specialty woods such as the kinds that we at Reliance Timber provide, including Tongue & Groove, Shiplap, Special Trim, Post & Beam, Logs, etc… have yet to come down in price. When the pandemic first began, we were fortunate enough to see the prices for specialty woods go up at a significantly slower rate than commodity lumber. Therefore, while it took longer for our prices to go up, it will also take longer for it to go down.

So, are lumber prices going down? They are! For Reliance Timber, however, the wait will have to be just a bit longer. We’re really looking forward to that day! In the meantime, we’re still here and ready to serve. Reliance has the lumber you need. Contact us today to see how we can help you.