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Log shortage fuels price increase

March 17, 2014

By Rick Sohn, p.H.D
Umpqua Coquille LLC

Log shortages keep prices very strong, with lumber steady to rising. Otherwise, the season and bad weather have slowed building and raised unsold inventory. Mortgage rates are creeping up. Recent lumber manufacturing, home construction, and housing markets are compared to 9 years ago.

chart-sohn-march14

Interpretation
Lumber prices are rising slightly, but log prices remain very strong, even moreso this winter than usual. Compared to years such as 2005, log prices are much higher today. According to Random Lengths, mill inventories of products are low, so when the weather improves, demand could push the price of lumber and other wood products higher.

Seasonal patterns and harsh weather have caused Unsold Inventory to increase and Housing Starts and Building Permits to go down. Mortgage rates continue to creep up, albeit not very much. All of these are unfavorable. Let’s hope springtime brings more homebuilding, home sales, and remodeling, pushing the construction economy up.

The flatness of home prices this month is good news for would-be homebuyers. Some analysts are saying that too much price rise could scare away purchasers.

Here’s wishing for Spring.
Data reports used with permission of: 1Random Lengths. Kiln Dried 2×4-8′ PET #2/#2&Btr lumber. 2RISI, Log Lines. Douglas-fir #2 Sawmill Log Average, Southern Oregon region. 3 US Dept of Commerce. 4Regional Multiple Listing Service, courtesy of Janet Johnston, Prudential Real Estate Professionals, Roseburg, OR. 5Freddie Mac. National monthly average. 6Mortgage-X, national average, most recent week. 7Zillow.com, National Median home value. (http://www.zillow.com/or/) © Copyright Rick Sohn, Umpqua Coquille LLC. Issue #7-2. For more information or permission to reprint, please e-mail rsohn@umpquacoquille.com

  
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Reality Check: US Lumber Prices Await Signal from Housing Mkt – MNI NewsLumber Business News UK | Lumber Business News UK March 17, 2014

[…] conditions, and dealers wait for any signs of a sustained increase in the annual rate of …Log shortage fuels price increaseOregon Natural Resources […]

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