Lumber Veteran Sees Holding Off on Construction as “Sensible”

A National Association of Home Builders’ survey found 19% of builders are delaying building in order to mitigate high lumber costs, and one lumber industry veteran calls that a “sensible decision.” Chief Operating Officer at Sherwood Lumber Kyle Little told CNBC that there is no reason not to hold off on projects if possible, and price relief will likely come in the next six to 12 months. Still, price relief does not mean a return to pre-pandemic lumber prices. Lumber prices are up more than 200% compared to last year, but July lumber futures dropped by more than 5% on Tuesday to $1,158 per thousand board feet.

Despite the recent declines, lumber remains up more than 200% in the past 12 months.

In late May, Little told CNBC he expected the current lumber cycle, featuring volatile trading and elevated prices, to remain for “the foreseeable future.” At the time, he stressed that prices could come off their highs but still be above historic averages.

He reiterated that view Tuesday, saying the company’s forecast “really has not changed.”

“We’re in month number 12 of what we believe to be a 24-to-30-month … cyclical bull wave,” Little said. “We really believe the new three-year mean will be much, much higher — almost two times than what we’ve seen the previous 20 years.”

The sharp move higher in wood prices has added cost to projects and was cited as one factor behind a drop in housing construction that was reported in April.