Framing lumber prices have risen 43% over the last year and are approaching an 8-year high (see blue line in chart above). As of last Friday, the price per 1,000 board feet of framing lumber reached $416, the highest price since early April 2005, and prices are expected to rise even further this year as the housing and construction recoveries in the US take hold. Lumber futures prices on the Chicago Mercantile Exchange (CME) have fallen in recent weeks from their near 8-year high of $390.50 in mid-February, but are still at the highest level since April 2005 (see red line in chart).
Here’s a recent report from the Vancouver Sun:
There’s no way North American stud lumber sawmills will be able to keep up with the recovering U.S. housing market, new research being compiled by the International Wood Markets Group shows.
The shortage of studs — boards used to frame walls in residential houses — is expected to lead to record lumber prices and will make construction lumber profitable enough that European sawmills will likely make inroads into North America, where a supercycle is shaping up for commodity lumber, Wood Markets president Russ Taylor said Friday.
Lumber prices today are high, having broken through the $400 US a thousand board feet barrier, but Taylor said this is just the beginning.
“Two or three years out is when we think it is really going to hit,” he said.
U.S. housing starts are expected to more than triple off their 2009 lows between now and 2017, when Taylor said they will hit 1.5 million starts a year. Starts are expected to reach 925,000 to 950,000 this year, indicating the lumber rally still has a long way to go, he said.”