The lumber price bubble is finally bursting

Roy Livesey stacks a pallet of 2x4's at Allegheny Millwork and Lumber Company in Pittsburgh, Tuesday, March 31, 2015. (AP Photo/Gene J. Puskar)

It appears that the lumber bubble has finally burst.

Lumber prices are finally coming back down to earth, following a spring that saw prices double — and then double again.

Lumber futures fell more than 40% in June as consumer demand dried up for $50 and $60 sheets of plywood. Last year, those sheets of plywood cost just $20 each.

Homebuilders like Brad Olinger this spring said they had to tell customers the price of their new home would be going up by $30,000 just because of wood prices.

“Some lumber items we purchase were $400 a year ago, and now it’s up to $1,200. So, it is three times the cost,” Olinger said.

Now, he and home rehabbers are getting a break. Lumber is a bit more affordable again, and shoppers are less likely to experience sticker shock when they walk down the lumber aisle at Home Depot or Lowe’s.

Don’t expect home prices to drop

But from the “doesn’t that stink” file: Why homebuyers shouldn’t expect a dramatic drop in the price of new houses.

Prices of other home building materials like drywall, copper and steel remain at near all-time highs. That means the construction costs are still higher than they were a year ago — and that stinks.

But with Americans now traveling again — instead of just working on their homes — builders are hopeful that decreased demand will finally mean lower prices for construction.

That won’t reduce existing home prices, but it should finally offer new home buyers and rehabbers a bit of a break, so you don’t waste your money.

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John Matarese
John Matarese

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