Wall Street is getting jumpy over falling lumber prices, which may be signaling trouble ahead for the housing market and the broader economy. Lumber futures have plunged 24% since August's three-year high, closing Monday at $526.50 per thousand board feet, per the Wall Street Journal. Random Lengths' Framing Lumber Composite Index reports that on-the-spot prices are down 12% since August 1. In July, residential building permits were at their fewest since June 2020 and construction spending dipped 3.4% from May's record.
The dip comes as the housing market softens and ongoing trade uncertainty messes with supply chains. The trend is raising eyebrows since lumber has often signaled where the broader economy and housing market are headed. Earlier this year, the market was flooded with lumber as buyers prepped for higher tariffs on Canadian imports and possible new duties threatened by President Trump. As Washington mulled the national security implications of imported wood, prices bounced, then tumbled when threats of additional tariffs faded. They've "been on a roller coaster," as the Journal reports.
With demand low, producers are responding by scaling back. Interfor, North America's third-largest lumber producer, is cutting output by 12%, while Domtar is idling mills and reducing shifts in Canada and the US. Analysts say more cuts are likely as duties make Canadian sawmills less profitable and demand continues to wane. But there is a glimmer of hope. Lower mortgage rates—paired with a potential cut to the Federal Reserve's key interest rate—could kick-start construction and renovation; the latter remains lumber's biggest buyer.
,
uBlock 
,
and
Ghostery 
)
