Could Falling Lumber Prices Signal a Big Economic Shift?

In May 2021, lumber prices reached a record $1,607 per thousand board feet, sounding the first alarms about an inflationary shift in the U.S. economy, and the most recent price slump could point toward more big changes ahead, Fortune reports. This time around, plummeting lumber prices may indicate that inflation has reached its peak, especially as the housing market slows its lightning pace of high-priced home sales.

After fluctuating throughout much of the pandemic, lumber prices have dipped to $648 per thousand board feet, a more than 50% decrease from a March high of $1,464. Though seasonal shifts account for small changes in lumber costs, the latest drop comes at a time of transformation in both the housing market and the U.S. economy at large.

The unpredictability of lumber means that there is no guarantee prices will stay low. But given how prescient the market has been over the past few years, and with fears of an economic contraction and possible recession looming, it will remain an important signal.

“[Lumber] was an indicator that we were going to see this rapid expansion in the overall economy last year and that once it peaked, we were going to start seeing it contract,” [Darin] Newsom said.

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