Lumber had a record year on the market in 2020, but industry experts predicted that this trend may finally begin to slow as winter ramped up. However, in December, lumber prices shattered all-time highs for the month, and January looks to be continuing the trend. Following an altogether unpredictable year, demand has greatly exceeded the typical winter lull, leading to delays, higher prices, and a temporary shortage of some materials. Let’s take a look at the new year lumber forecast for 2021.
The lumber futures market reached a record $845 per thousand board on December 14th. This eclipsed the previous high seen in August when the boom was thought to have peaked. These market trends seem to be moving in conjunction with builder confidence, which hit its highest level since monthly surveys began in 1985. As the building industry booms, so goes the lumber industry. Additionally, as noted by Forbes, the six-month forward price for lumber futures in early January “is around $670, or only about 24 percent below today’s spot lumber price.”
How the Trend Has Been Sustained
2020 was a unique year. There were a variety of factors that have contributed to the unprecedented highs the lumber industry has experienced. But as highlighted earlier, the seasonal industry tends to slow down as the colder months come. That was not the case in 2020 for several different reasons. Weather was largely warmer and drier, making building conditions more favorable. Additionally, in the Western US and Canada, lumber production was devasted in 2020 by rampant wildfires that saw the loss of enough lumber to build over a million homes. This scarcity is helping drive lumber prices across the country.
The housing market is still booming as well, with record-low mortgage prices fueling a building binge as suppliers try to keep up with the demand for housing. Multi-unit building demand has gone down, however that has been matched by increased demand for lumber-intensive single-family homes. Home remodeling has also ticked up, as many homeowners were placed under stay-at-home orders and began investing in their living spaces. However, while the building craze continues, delays in the supply chain have caused prices to reach all-time highs.
2020’s initial lumber boom that came in April was partially driven by supply delays due to the COVID pandemic when some mills were forced to close and production slowed. This is still a prevalent factor. The huge demand has been difficult for producers to meet, a trend that was exacerbated over the end of December as many mills across North America closed for the holidays. This has the potential to delay the delivery of materials up to three months into this new year.
Product delays are prevalent for a variety of different building materials. Our team notes, for instance, that some cabinet lead times are expected to be extended by 8 weeks currently, while vinyl windows are landing as far as twelve weeks out. Pandemic-related production and delivery delays are matched with unprecedented demand from builders, creating a perfect storm.
New Year Lumber Forecast Wrap Up
2020 was an unpredictable year for the lumber industry. Even when expected to slow down, the industry has defied the odds. From all the available data, it looks like this lumber binge is only going to continue through 2021. However, some experts do expect to see a tapering off as mid-February arrives, but with the unpredictability of the previous year, only time will tell.
What Can National Lumber Do to Help?
If you have a project upcoming, reach out to the expert team at National Lumber today. The staff will prepare a takeoff and estimate for your project. With extended lead times for several products, it’s important for builders to contact suppliers far in advance for needed materials to help minimize material delays once your project has begun. Send us your plans so you can ensure that you are using real-time costs to estimate your projects and minimize any loss in profit. We look forward to hearing from you!