Many home builders, contractors and retailers wagered that higher U.S. tariffs on imports would boost the cost of lumber, while lower interest rates would lift demand for the building material.
But those bets have failed to pay off — and lumber prices have tallied a steep decline from a record high reached only three weeks ago. MarketWatch
Of course, there’s more than just tariffs in play in the market. Housing demand is down. Many new owners tackle renovations in the first months of home ownership. Fewer sales mean fewer renovations.
The market had rallied on classic “buy the rumor, sell the fact” action, he told MarketWatch. Prices for lumber had been higher just a few weeks ago based on the idea that tariffs were going to be attached to lumber and people were going to have to pay substantially higher costs — yet the underlying demand isn’t there, Kuta said.
People also overestimated where interest rates would be and their impact on lumber demand, which continues to slide lower, he added, with the “swing and a miss” he referred to based on housing statistics and earnings for publicly traded companies that supply lumber.
For now, the addition of tariffs has not resulted in the anticipated price increase. So what’s the takeaway? Hire contractors and get that house addition done! Lumber prices, a main component in construction, are down because demand is down, which on turn means contractors are looking for jobs– it is time to build.
Home Economics 