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Lumber prices may soon start to recede from their recent record highs, and some home builders say they may stop taking new orders or delay projects with that expectation in mind.
Prices for lumber have surged more than 200% over the past 12 months. That has added an estimated $36,000 to the price of an average new single-family home, according to the National Association of Home Builders.
But the sky-high prices may soon back off: Lumber futures have posted slightly weaker numbers over the past month. For example, lumber futures for July delivery dropped more than 5% to $1,158 per thousand board feet. That is down more than 30% from a record of $1,711 that was set on May 10, CNBC reported this week.
So even as prices edge down even slightly, they will still be well above historic averages, Kyle Little, a lumber industry veteran, told CNBC.
“We’re in month number 12 of what we believe to be a 24-to-30-month … cyclical bull wave,” Little told CNBC. “We really believe the new three-year mean will be much, much higher—almost two times than what we’ve seen the previous 20 years.” But a pullback—at least somewhat—in lumber is inevitable as higher prices tame demand, he added.
Some builders are instructing their customers, “If it doesn’t need to be done today, it might be better time to take a breather and start this project later in the fourth quarter, possibly in Q1 of 2022,” Little told CNBC.