Building Pros Are Wary of Lumber Price Drop

Globe St // June 21, 2021

By Erik Sherman

The number for last week on Wednesday: $967.90 for a thousand board feet of lumber. That is both enormous in historical context—look at the lumber pricing data at Nasdaq and click on the MAX view to see how high the spikes are. And yet, it’s a steal compared to the intraday high of $1,733.50 on May 10, 2021.

It’s a time when professionals could understandably look for good news. The initial fall is helping. But there’s much to make you wary.

Nicholas Minoia, managing principal, at Northeast CRE builder and owner Diversified Properties, calls himself “cautiously optimistic” given “lots of focus by those empowered to do something to continue to keep pressure on to reverse the upward trend,” as he tells GlobeSt.com.

“The rapid price drops this week means that the market is beginning to correct itself from recent highs,” Bruno Slosse, CEO of pricing software vendor Vendavo, tells GlobeSt.com. 

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But people are carefully watching developing conditions because no one knows what will happen.

“What the observers of the market should know is that the volatility of price movement will be extreme for the next 6 months at a minimum,” says Mike Wisnefski, CEO of MaterialsXchange. “If lumber is an input cost in your business, then you should consider locking your pricing in when you know what the selling price Is for your end product.”

“Despite the drop in prices, suppliers and manufacturers still have leverage—especially in the South Florida market—to keep pricing quotes high,” Adam Mopsick, CEO of South Florida-based Amicon, which offers general contracting, owner representation, design-build, and property inspections services, tells GlobeSt.com. “Our project managers are currently not considering this long term and continue to strategize project budgets to include higher pricing as the demand continues to soar in local markets like luxury residential and ground-up commercial development.”

Plus, wood does not a full house make.

“We’re watching closely the relationship to other building materials that have also seen meteoric price increases over the last year, like copper and PVC related products,” Minoia says.  “I’m hearing today that the next lumber related wave to hit may be wood siding products.  Hearing stories of short supply and price increases that I believe are unsustainable.”

“Other essential commodities such as copper, aluminum and steel have not experienced the same declines,” says Mopsick, “and we anticipate that this volatility may continue as the construction market levels out to meet the construction surge.”