According to BusinessInsider.com, lumber prices hit a new low this week of $495 per thousand feet board. Prices had increased during the pandemic as demand for homes was high and saw mills had difficulty fulfilling orders. But as the market returns to normal, higher mortgage rates are helping to slow down the booming housing market, decreasing home builders' demand for lumber and lowering its prices. The decline in lumber prices also suggests that inflation could be easing.
"For the last couple of years it's just been an unbelievable market where all the builders are taking orders, everybody is having phenomenal success, everybody is having phenomenal margins," LGI Homes CEO Eric Lipar said in the company's earnings conference call on Tuesday.
LGI Homes is a builder of single family homes across Western and Southeastern states and has benefited from the higher margins amid the COVID-19 induced housing demand boom. But those margins aren't sustainable as demand for homes cools down and prices show signs of falling in some markets.
Advertisement
Related Stories
Housing Policy + Finance
Even With Inflation Running Hot and Elevated Mortgage Rates, Buyer Demand Rises
Mortgage rates will likely stay high for the next few months, but that doesn't seem to be deterring homebuyers
Housing Policy + Finance
The Garden State Takes a New Approach to Expanding Affordable Housing
Recent legislation in New Jersey could provide inspiration for eliminating affordable housing hurdles in other places with strong housing markets
Housing Policy + Finance
Housing As Health Care: The Debate Continues
As more states channel Medicaid money into housing, the debate around whether states should use public health insurance money to provide housing is intensifying
