Cottage builders can breathe a sigh of relief as lumber prices have begun to fall. From whopping highs of $1,680 USD or $2,100 CAD per 1,000 board feet in early May, the price has now fallen to around $750 USD or $936 CAD, according to Markets Insider.
Last year, the pandemic saw lumber mills shut down while people stuck at home took on new home improvement and DIY projects. This mismatch in supply and demand sent lumber prices skyrocketing; prices peaked in May with costs more than four times higher than the pre-pandemic average. Lumber became so valuable that construction sites around the country reported lumber theft, and others took to illegal logging.
“We’ve hit this peak and we’ve now come down,” says Gary Bull, a forestry professor at the University of British Columbia. “People are off on holidays and they don’t want to build anymore.” Not to mention with restrictions lifting, “now they’ve got ways to spend their money other than on house renovations or building a new house.”
But despite the price drop, don’t expect lumber prices to free-fall back to pre-pandemic levels. “Our projections show the price of lumber will fall to $600 USD per 1,000 board feet by the end of 2021,” says Samuel Burman, a commodities analyst at Capital Economics. Burman adds that by the end of the third quarter in September, he estimates the price to be around $700 USD. Thereafter, lumber prices are expected to decline gradually and hover at less than double the pre-pandemic prices as demand for lumber remains high.
“In North America you still have population growth, and you still have increasing substitution—that means we’re trying to use more wood and less steel and concrete in manufacturing,” explains Bull. “We know that the housing stock is still short. There’s a lack of affordable housing, a huge DIY market, and everyone wants a cottage. All of those things on the demand side will affect prices.”
Additionally, this year’s record temperatures could mean a hot season for forest fires, which could send prices back up again. In the long term, the Canadian lumber industry will be challenged by climate change, disease, and insect infestations, all of which could limit the supply of lumber and drive prices upward. “I think for 20–30 years we’re going to see this reduction in available logs in Canada, particularly for making lumber,” says Bull.