The great run-up of lumber prices since mid-2020 happened so quickly and was so severe that some people remarked there must be trickery at play on the part of sawmills. was not building enough new homes based on population – demand for lumber was consequently depressed which kept prices low. The primary reason for this is that during those previous ten years, from 2006 to 2017 – while the U.S. For now, here is a deep look into what the current home building trends are and what that means for the manufactured forest products industry.Īs both the housing construction and lumber manufacturing industries continue to adjust to the new reality, folks have often been asking, “when will prices return to normal?” The answer is: they won’t. As the next decade or two unfolds, it will become clear what – if any – impact this shift in desire will have on the construction business we have known over the past several generations. The data shows that single-family housing is the largest segment of new home building, by far, and is also the type of construction which uses the most wood. Instead of a detached house, millennials are choosing to purchase condos and townhomes in communities where they can walk their kids to school, go for coffee, do grocery shopping or go to the park. Most obviously is the fact that this age group is not as interested in single-family housing, rather they prefer to live in multi-family dwellings. It is important to note that the millennial appetite for housing differs in several important ways from previous generations. The only bright spot in all this was the incredibly low interest rates, which made taking out a mortgage attractive.
was underbuilt compared to population for ten years following the housing crash of 2006, and economic downturn of 2008. And there are more millennials than baby boomers, so expectations are for 15 years of robust demand for housing simply due to demographics. Indeed, the single largest cohort of first-time home buyer right now are millennials.
housing market would have increased because the millennial generation is now into homebuying age. There is no question that activity in the U.S. It looks like the remarkable highs and attendant corrections down might be getting worked out, as these swings are less extreme each time.
Over the past two years as the lumber market reacted to big changes in external conditions, there was never-before-seen high price levels and volatility. They then dropped quite a bit, levelling off in mid-June as a modicum of supply-demand balance seemed to have been reached. Looking back, it is difficult to peel out which changes we are now living with were a direct result of the COVID-19 pandemic and which would have happened anyway, if not so suddenly.Ĭonstruction framing dimension softwood lumber prices crested higher at the beginning of this year on restricted supply due to ongoing transportation problems and continued strong demand. It has been over two years since the huge disruption of a global pandemic hit society in general and business in particular.
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