As of now, lumber prices remain steady above $510 per thousand board feet, nearing the four-week high of $516 reached on Stember 17th, driven by an upturn in demand for building materials. The recent 50 basis points rate cut by the Federal Reserve marks the first reduction since 2020, fueling optimism for lower mortgage rates and a rebound in housing demand.
Moreover, early Stember brought consistently lower bond yields, contributing to a decline in the average rate on a 30-year fixed mortgage, which fell to 6.09%, the lowest level since early February 2023. These lower borrowing costs have spurred an increase in housing demand, evidenced by a 4.9% rise in U.S. building permits in August, reaching 1.475 million on an annualized basis, exceeding expectations. Additionally, housing starts surged by 9.6%, totaling 1.356 million units, marking the most significant increase in six months. In Canada, building permits rose a remarkable 22.1% in July, primarily driven by robust non-residential construction, further bolstering lumber demand.
Despite the positive trends, lumber has seen a decrease of $43.95 (or 7.68%) since the beginning of 2024, based on trading data from a contract for difference (CFD) tracking the benchmark market for this commodity. Analysts forecast that lumber will trade at approximately $482.17 per thousand board feet by the end of the current quarter, with estimates suggesting a further decline to $452.42 over the next twelve months.