For the 13th consecutive week, framing lumber prices are down.
On Friday, the cash market price of lumber fell to $389 per thousand board feet, according to data from Fastmarkets Random Lengths, an industry trade publication. That's down 74% from its $1,515 all-time high in May.
"The market seems to be trying to find a bottom," says Shawn Church, editor at Fastmarkets Random Lengths. "However, there is now a lot of wood in the distribution system, and a bottom is proving elusive."
What's going on? As lumber prices reached record levels this spring, many DIYers and builders simply stopped buying. At the same time, sawmills were upping production in order to cash in on the record prices. That, of course, was a prefect recipe for a correction. But now with prices still freefalling, buyers have little reason to jump back in. Thus that's why we've shifted all the way from a wood shortage to an oversupply.
In a matter of three months, lumber has gone from exorbitant to relatively affordable levels. Prior to the pandemic, the price usually ranged from $350 to $500. It's now at the lower end of that spectrum.
These wholesale price cuts continue to trickle down to the retail side and, in recent weeks, they've accelerated. Kyle Little, COO at Sherwood Lumber, a lumber disruptor, told Fortune recently that by the end of September the wholesale price cuts should be fully reflected in the aisles of big box stores like Lowe's.
But some lumber yards are resisting dropping their prices. After all, they bought some of this wood for much higher prices this summer. So lowering prices can mean taking losses.
"Many buyers [are] still working through high-priced inventories. They won’t return to the open market in any meaningful way until they get that gorilla off of their backs. Contract volumes and purchases out of distribution are currently filling many of any holes that develop in inventories," Church says.
This story was originally featured on Fortune.com