Mainers who put off building a new deck or doing other renovations to their homes because of outrageously high lumber prices can breathe a tentative sigh of relief, as those prices appear to finally be going down.
After a winter and spring that saw lumber prices reach astronomical heights and lumber shortages in yards and at retailers nationwide, prices for lumber finally began to drop last week, after sawmill production began to catch up with demand.
Lumber futures posted their biggest drop in history last week, with an 18 percent fall at the Chicago Mercantile Exchange on Friday, amounting to $1,059 per thousand board feet of 2x4s. That’s down almost 40 percent overall from a record high of $1,700 per thousand board feet, which was reached on May 10, according to Bloomberg News. Before the pandemic, it traded in the range of $300 to $500 per thousand board feet.
The soaring prices and supply crunch have meant that everyone — from professional contractors to do-it-yourself homeowners — has had to rethink how much they can afford to pay for a new porch or a kitchen renovation. With prices up to four times higher than normal, many people have just decided not to proceed with projects.
“There has really been a curtailing of demand, based on the level of pricing,” said David Flanagan, president of Viking Lumber. “People have just said, ‘Nope, I’m not gonna do it at that price.’ And that’s started to show in the marketplace, the fact that people are just not willing to pay that much.”
The high prices come from several factors. A combination of pandemic-related mill shutdowns in 2020 and slowdowns in production because of hurricanes in the southern U.S. and forest fires out west led to a supply shortage — which in turn spiked prices.
In Maine, the pandemic fueled a boom in home improvement projects, as people sat inside and then decided to redo or repair elements of their homes. There has also been a pandemic-related real estate boom in the state, with single-family home sales in April 2021 rising close to 36 percent from the year before, according to data released on May 24 by the Maine Association of Realtors.
Flanagan said that the lumber market is starting to crack, however, and while inflated prices will likely stick around for the summer, they won’t be quite as high as they were in the spring — his company has already slightly lowered prices on some lumber. By the end of the year, he said, prices should start to get closer to normal.
“There’s only one direction it can go in, and that’s down. It’s still ridiculously high,” Flanagan said. “We haven’t seen any dramatic drops yet, but it’s starting to move in that direction. There’s no question that in the fourth quarter of the year the prices should be a lot less.”