Lumber Now Piling Up for Manufacturers

The lumber roller coaster ride continues, with nearly half of manufacturers and dealers now claiming excess inventory after shortage earlier this year. (iStock)

Call it a woodpile up. Lumber dealers are seeing inventory stack up just months after a shortage sent prices skyrocketing.

A survey from John Burns Real Estate Consulting revealed that 49 percent of lumber dealers and manufacturers in July had excess lumber capacity. Meanwhile, none reported inventories that were “very tight,” according to Bloomberg.

Both of those metrics represented a vast improvement for dealers and manufacturers compared to just a few months ago. In April, just 17 percent claimed to have excess inventory. That same month, over 40 percent claimed to be very tight in terms of inventory.

As a result, lumber prices have been all over the map. The market peaked in May as low inventory coincided with a surge in home building. Those prices have come down dramatically in the three months since, however, and lumber futures are now trading around 70 percent below the May peak.

The development is a boon for homebuilders — and buyers — who would benefit from the drop in lumber prices. Some builders have been forced to restrict sales as construction of homes failed to keep pace with demand.

Lumber is just one material, albeit an important one, in a vast construction ecosystem, though. Shortages among other inputs continue to impact builders.

Additionally, continued labor shortages and supply chain problems threaten to further increase the cost of constructing new homes.

[Bloomberg] — Holden Walter-Warner

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