Talking to reporters last month, Powell mentioned the fall in lumber prices as a sign that some pandemic price spikes would prove transitory.īut for lumber, that's still not the end of the storyĭespite the recent drop in prices, lumber still costs about 80% more now than it did before the pandemic - a premium that builders say is adding tens of thousands of dollars to the price of a new home.Īnd the supply of lumber is still not growing very fast. The supply shock that sent lumber prices to record levels this year did not come from a shortage of trees: The price of raw timber has barely budged.įederal Reserve Chair Jerome Powell testifies at a House Coronavirus Subcommittee hearing in June. Here are three things that the rise, fall and now volatility of lumber prices tell us about the pandemic economy. And companies in the lumber industry are wrestling with a new pandemic problem: a shortage of workers. Lumber prices may have fallen, but they are still elevated, creating new headaches for the critical housing sector. That's not the end of the story, however. The price surge was so big and sudden, it became a symbol of what some economists feared: rampant inflation.īut over the past two months, lumber prices have been dropping equally fast, giving weight to the central bank's argument that pandemic price spikes for many products are likely to be temporary. Lumber prices surged to record highs this year on the back of booming demand from homebuilders and do-it-yourselfers with plenty of time on their hands. It's been a roller-coaster ride for lumber prices over the last year – and it's drawn outsize attention from the aisles of Home Depot to the Federal Reserve. But prices remain volatile and still more expensive than pre-pandemic levels.
Lumber prices surged during the pandemic, only to fall as the economy started to open up again. Lumber is stacked up for sale at a Home Depot store in May in Doral, Fla.
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