Continuing:
"The market is in trouble. It could spiral out of control in the next few months," Dustin Jalbert, senior economist at Fastmarkets RISI, told Fortune. The issue? Supply, which is already backlogged, simply can't catch up as demand continues to grow with the start of the home building and home renovation seasons.
This supply and demand mismatch is largely a result of the pandemic. At the same time that state-mandated lockdowns caused mills to halt production, bored quarantining Americans were rushing to Home Depot and Lowe’s to buy up materials for do-it-yourself projects. That caused lumber inventory to plummet. It only got worse from there: Recession-induced record-low interest rates caused a housing boom. In March, new housing starts hit their highest levels since 2006. Of course, new homes require a lot of lumber, thus exacerbating the shortage.
On the supply side, lumber production is finally rebounding: Wood production hit a 13-year high. But that can only do so much. Limited mill capacity combined with labor shortages, mean supply can't catch up to robust demand.
Stinson Dean, CEO of Deacon Lumber, told Fortune on Monday that soaring lumber futures contracts, including for months as far away as November, signal that lumber prices will be elevated for quite some time."
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