Lumber Prices Plummet to Lowest Levels Since January 2017

It might be too little, too late for consumers, but data released this morning show that producer prices for softwood lumber – a critical input for new home construction – have retreated sharply from their mid-year highs. They are now at their lowest levels since January 2017, on the eve of the U.S.-Canada trade war that sparked the surge in lumber prices.

This is welcome news for homebuilders across the United States who have been struggling with high and rising materials costs. But a host of other costs also have been climbing for builders – including steel costs, a victim of the U.S.-China trade war, and labor costs – and they've already begun to scale back their construction plans for the next two years.

New home sales have now registered their largest string of declines since 2010. At a time when the U.S. labor market is showing record unemployment lows and accelerating wage growth, home building has been a surprising weak point in an otherwise strong economy.