Lumber Prices Break Key Resistance to Hit Fresh Lows

SEATTLE (Scrap Monster): The global lumber prices tumbled to touch the lowest level since June last year, mainly on account of the continued slowdown in the U.S. housing market.

The prices witnessed 9% dip in three days to hit $382.80 per thousand board feet, thus breaking the key resistance level of $400, which it has been holding since 2013. However, the prices rebounded the next day by around 5% to $411 per thousand board feet. Year-to-date, lumber prices are down by almost 64%.

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The price fall in the commodity is mainly attributed to deceleration in housing markets in the region, which has been plagued by rising mortgage rates. The average 30-year mortgage rate of 6.5% is almost double the levels seen in the beginning of the year. At one point, it had even touched 7.03%.

The high mortgage rates have impacted the affordability for new home buyers, thus affecting home sales. The existing home sales recorded ninth straight monthly decline in October this year, falling by 6% over the prior month. Year-on-year, the existing home sales are down significantly by 28%. Also, the home builder confidence during the month of November hit the lowest level in a decade.