Lumber on the Brink of Bear Market Territory as Tariff-driven Rally Fizzles Out

SEATTLE (Scrap Monster): Lumber futures (LB1:COM) have come under strain after the initial tariff-driven upswing has fizzled out and the cracks in the housing market are beginning to show. 

LB1:COM has retreated from an early August high of ~$695 per thousand board feet to about $560, a decline of nearly 19.5%, making it just shy of the 20% mark that would push it into a technical bear market. 

Lumber futures saw a surge driven by tariffs and optimism over lower interest rates, which pushed prices to their highest levels in more than three years. However, the enthusiasm soon faded away, as recent housing data disappointed, and builders scaled back due to higher input costs, weaker demand and looming affordability challenges. 

Housing affordability remains stretched even with potential rate cuts, requiring better wage growth or increased supply for meaningful improvement, according to Rafe Jadrosich, Senior U.S. Homebuilders and Building Products analyst.

There have been a lot of swings in the lumber prices in recent times. A combination of factors, including mill closures, reduced North American production capacity, and tariff concerns, has reportedly resulted in increased volatility in the lumber market.

Apart from that, the lumber market has also been dealing with other challenges, including reductions in North American production capacity and rising costs, resulting in supply concerns.

Courtesy:www.msn.com