Lumber prices are through the roof.
So much so, demand is significantly outweighing supply.
According to Fortune, “Lumberyards and homebuilders alike have delayed buying lumber from sawmills in hopes the price of the sky-high commodity would finally come back down to earth. It hasn’t budged, and now the buying rush is on ahead of spring and summer projects.”
In fact, prices aren’t likely to come down any time soon.
In 2019, lumber demand was severely impacted by tepid demand, which led to pricing pressures, and the reduction of production. By 2020, when interest rates were cut, demand for new homes and lumber skyrocketed. That diminished supply from 2019, coupled with big demand by 2020 created that severe supply and demand imbalance.
Even the National Association of Home Builders told President Biden, “NAHB believes the White House can play a constructive role in mitigating this growing threat to housing and the economy by urging domestic lumber producers to ramp up production to ease growing shortages and making it a priority to work with Canada on a new softwood lumber agreement.”
“When combined with better-than-expected housing demand and home building activity, along with projects being done by the DIY sector, builders are seeing lumber shortages driving up prices by more than 60% since mid-November. The Random Lengths Framing Composite Price shot past the $600 barrier for the first time ever on July 31, 2020 on its way to a record-high of $955 — more than 60% higher than the previous record.”
With lumber prices likely to push higher, some of the top stocks to consider include:
- ETFs such as the iShares Global Timber & Forestry ETF (WOOD)
- Invesco MSCI Global Timber ETF (CUT)
- Weyerhauser (WY)